The full case caption appears at the
end of this opinion. G E R B E R, Judge �1 In September, 1994, about 80 investors filed acomplaint against multiple defendants alleging negligence,breach of fiduciary duty, common law fraud, securities fraud,consumer fraud, constructive fraud and violation of RICOstatutes. The plaintiffs (“plaintiffs” or “appellants”)obtained a judgment of $8,638,044 against Ben Friedman(“Friedman”), the main organizer and promoter of the scheme.Other defendants included his accountants, real estate brokerand title company. This appeal involves the sole remainingdefendant, Stewart Title and Trust of Phoenix, Inc. (“StewartTitle”). The main issue is whether Stewart Title is liableunder respondeat superior for the conduct of its escrow agent,Bonnie DeAngio (“DeAngio”). FACTUAL AND PROCEDURAL HISTORY �2 Attorney Friedman solicited the plaintiffs to investin a number of limited partnerships. With the participation ofa real estate broker, accountants and title companies, hedefrauded them by purchasing land under a fake name and thenreselling it to the limited partnership at an inflated price. The Scheme �3 Upon locating an appropriate property, Friedman, usinga fictitious name or shell partnership, would buy the landthrough an escrow established at a title company. While theescrow was open, he would create a partnership and solicitinvestors to provide funds to pay the down payment. After theescrow closed and title was transferred to the fictitious buyeror shell entity, he would then “sell” the property to thelimited partnership for a price greater than the purchase pricehe paid to the original seller. By acting through thefictitious buyers and shell entities, he was able to conceal thefact that he was transferring the property to the investmentpartnership at a substantial profit. Friedman and hisassociates shared the undisclosed profit and related fees. DeAngio’s Role �4 DeAngio, an employee of Stewart Title, processed atleast eight escrows that Friedman established in the name of thefictitious buyers or shell entities. On at least one escrowtransaction, she notarized the signature of a fictitious personon the deed of trust and assignment of rents executed in favorof the seller. On another escrow, not covered by this appeal,she assisted Friedman in impersonating a fictitious buyer in aface to face meeting with the original seller. Herparticipation in both transactions facilitated Friedman’s schemeto conceal profits. �5 After the escrows were closed and title transferred tothe fictitious buyer, Friedman, secretly acting as thefictitious buyer, transferred the property to the investmentpartnerships. Although these transactions were not handled inescrow, DeAngio notarized affidavits of value and some of thepartnership documents. The affidavits of value showed that thefictitious buyer, whom DeAngio knew to be Friedman, wasreceiving the undisclosed profit on the transaction. Usually,after each closing, Tom Lynch, an associate of Friedman, wouldpay DeAngio several hundred dollars. No evidence exists thatStewart Title knew of DeAngio’s wrongful actions. �6 DeAngio eventually terminated her employment withStewart Title to work for Chicago Title, where she continued toparticipate in Friedman’s schemes. Here and in the trial court,plaintiffs allege that she and Stewart Title are liable for thefraud-based claims because of her involvement with Friedmanwhile she was working at Stewart Title. First Summary Judgment: The Winters Plaintiffs �7 Stewart Title first filed a motion to dismiss/motionfor summary judgment which was denied by Judge Dunevant, whoconcluded that Stewart Title could be liable under respondeatsuperior for Racketeer Influenced and Corrupt Organizations Act(“RICO”) violations. After the case was re-assigned to JudgeHowe, Stewart Title filed three more motions for summaryjudgment. �8 Stewart Title’s first summary judgment motion relatedto plaintiffs who invested in property around Deer ValleyAirport (Chaparral, Quail Run, Ox Box, and Kachina AirparkLimited Partnerships). Friedman purchased the property in thenames of Robert and Estelle Winters (“Winters”). The Winters,names of real people known by Friedman, were uninvolved in thesetransactions. They never gave permission for use of their nameor knew that their names were used. �9 DeAngio opened two escrows and prepared the escrowdocuments at Stewart Title. She notarized the fictitiousWinters signatures on the deeds of trust on March 14, 1983,after leaving Stewart Title on March 5. Her last paycheck fromStewart Title was dated March 15. Friedman eventually sold theproperty to Quail Run, Ox Box and Kachina Airpark LimitedPartnerships while DeAngio was at Chicago Title. She openedanother escrow using the Winters’ name while at Chicago Title.Friedman resold the property to Chaparral Airpark LimitedPartnership (“Chaparral”) through a Chicago Title escrow.DeAngio again notarized the fictitious signatures on the deedsof trust, assignment of rent, warranty deed and certificates ofpartnership. �10 Plaintiffs argued that DeAngio was involved with threeof the four disputed Winters’ escrows (Quail Run, Ox Box andKachina) while at Stewart Title. They also asserted StewartTitle’s liability for all the fraud-based claims, includingthose related to Chaparral, based on common law conspiracy.Judge Howe granted Stewart Title’s motion for summary judgmenton these issues. The Second Summary Judgment: The Baird Plaintiffs �11 In its second motion for summary judgment before JudgeHowe, Stewart Title argued that it could not be liable fortransactions related to plaintiffs Max and Rita Baird (“Bairdplaintiffs”) because neither it nor its employee DeAngiodirectly participated. Friedman notarized the signatures onthat transaction and First American Title closed thetransaction. The Baird plaintiffs conceded they did not have aclaim of negligence against Stewart Title but argued itsliability under common law conspiracy. The trial court grantedsummary judgment in favor of Stewart Title on these issues. Third Summary Judgment: Northwest Phoenix and Central ArizonaProperties Plaintiffs �12 Stewart Title filed another motion for summary judgmentagainst plaintiffs who purchased property from Northwest PhoenixProperties (“NPP”) and Central Arizona Properties (“CAP”), forwhich Friedman acted as general partner. Stewart Title arguedthat the plaintiffs were not misled or victimized because thefraud could have been discovered by reviewing the public record.In its view, Friedman did not hide his involvement with NPP orCAP; if the plaintiff buyers wanted to know about Friedman’srole as general partner, such information was readily available. �13 Plaintiffs responded that they would not havediscovered the fraud through such a search and, even if theycould, access to public records would not bar their recovery.Judge Howe granted Stewart Title’s third motion for summaryjudgment on these issues and awarded Stewart Title attorneys’fees. �14 Plaintiffs timely appealed all these rulings. STANDARD OF REVIEW �15 In reviewing a summary judgment, we view the facts inthe light most favorable to the party opposing summary judgment.See Hartford Accident & Indem. Co. v. Federal Ins. Co., 172Ariz. 104, 107, 834 P.2d 827, 830 (App. 1992). Summary judgmentshould be granted if the facts produced in support of the claim”have so little probative value . . . that reasonable peoplecould not agree with the conclusion advanced.” Orme School v.Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). Thedetermination whether summary judgment was proper is de novo.See McDaniel v. Troy Design Services Co., 186 Ariz. 552, 554,925 P.2d 693, 695 (App. 1996). DISCUSSION Doctrine of respondeat superior �16 Appellants now assert Stewart Title’s liability for allclaims under respondeat superior. Stewart Title disagrees andargues that it is not vicariously liable to any of the threegroups of plaintiffs, the losing parties in the three summaryjudgments. We address this issue because it applies to eachgroup of plaintiffs and to each summary judgment. �17 An employer is vicariously liable for the negligent ortortious acts of its employee acting within the scope and courseof employment. See Wiper v. Downtown Development Corp., 152Ariz. 309, 310, 732 P.2d 200, 201 (1987); see also Robarge v.Bechtel Power Corp., 131 Ariz. 280, 283, 640 P.2d 210, 214 (App.1982). Conduct falls within the scope if it is the kind theemployee is employed to perform, it occurs within the authorizedtime and space limits, and furthers the employer’s business evenif the employer has expressly forbidden it. See Smith v.American Express Travel Services, 179 Ariz. 131, 135-36, 876P.2d 1166, 1170-71 (App. 1994); Ohio Farmers Ins. Co. v. Norman,122 Ariz. 330, 331-32, 594 P.2d 1026, 1027-28 (App. 1979). �18 Here, DeAngio’s actions fell within the scope of heremployment because she typically notarized documents and openedand closed escrows. Opening escrows using fictitious names byitself is legal; DeAngio’s opening of these escrows was thus notwrongful unless she knew that Friedman was acting with intent todefraud.
[FOOTNOTE 1] �19 DeAngio’s more apparent wrongful actions involvednotarizing documents for Friedman that she knew he had signedunder fictitious names and then concealing his fraudulentsignature. See Transamerica Ins. Co. v. Valley Nat’l Bank, 11Ariz. App. 121, 123, 462 P.2d 814, 816 (1969). Tom Lynch gaveher cash after these closings. When Friedman was asked in hisdeposition, “So basically, anything that you asked her to dowith respect to the defrauding of the investors, she [DeAngio]did?” he answered “yes.” He also described her as “a veryimportant facilitator” in his schemes. Though Stewart Titleargues that appellants cannot show that DeAngio knew ofFriedman’s actions, the parties’ depositions suggest that shemay well have knowingly engaged in misconduct while at StewartTitle by notarizing signatures she knew to be false. �20 Stewart Title further claims that it would havereceived escrow fees, collection account fees and titleinsurance fees even if DeAngio had acted legitimately and,further, that the increase in purchase prices of properties dueto her malfeasance did not affect its fees. Nevertheless,DeAngio’s activity benefitted and furthered the business ofStewart Title because of the repeat business that she generatedwith Friedman. In fact, DeAngio stated that Stewart Titleencouraged its escrow officers to procure new clients anddevelop business with existing clients. These clients wouldusually follow the escrow officers when they changed employment.Generating such benefits may suffice for liability. SeeTransamerica Ins. Co., 11 Ariz. App. at 125, 462 P.2d at 818(providing notary service could improve customer relations andfurther the company’s purpose). Due to DeAngio’s conductfurthering its business, Stewart Title may incur vicariousliability. See Wiper, 152 Ariz. at 310, 732 P.2d at 201.Whether Stewart Title would have received the same fees if shehad acted properly is irrelevant. �21 Appellants contend that because DeAngio’s last paycheckfrom Stewart Title was dated March 15, 1983, she thereforecontinued the work of Stewart Title in notarizing the Winters’signatures for the Quail Run, Ox Box and Kachina partnerships(the subject of the first summary judgment) on March 14, 1983.Stewart Title responds that DeAngio began work at Chicago Titleon March 7, 1983 and no evidence shows that she continued anywork for Stewart Title after that date. However, given factquestions about whether DeAngio knew that Friedman opened thetwo escrows with Stewart Title with the intent to defraud theWinters’ plaintiffs, Stewart Title may still incur liabilitydespite DeAngio’s new job at Chicago Title. The trial courtshould not have granted the first summary judgment against theWinters’ plaintiffs. �22 For similar reasons, Stewart Title may be liable to theCAP and NPP plaintiffs, subjects of the third summary judgment,because DeAngio notarized their documents while she was employedat Stewart Title. The plaintiffs had a right to rely onDeAngio’s notarization. As escrow agent, DeAngio had a duty todisclose known fraud. See Manley v. Ticor Title Ins. Co., 165Ariz. 318, 322, 798 P.2d 1327, 1331 (App. 1989). �23 Although Stewart Title argues that the plaintiffs couldhave learned of Friedman’s role as general partner by a searchof public records, plaintiffs were not obligated to do such arecord search. The existence of public records is no defense tofraud. See Field v. Mans, 516 U.S. 59, 70 (1995)(fraud existseven if the truth could be learned from public records); BishopCreek Lodge v. Scira, 54 Cal. Rptr. 2d 745, 752 (Cal. App.1996)(constructive notice of the facts from public records is nodefense to fraud). �24 Given these legal and factual questions, we reverse andremand the first and third summary judgments (excepting theChaparral issue) to the trial court to determine, by trial orotherwise, if DeAngio is liable to the Winters and NPP and CAPplaintiffs respectively. If these plaintiffs can demonstratethat DeAngio acted improperly in their transactions and that herwrongdoing fell within the scope of her employment, StewartTitle may incur liability under the fraud and negligence claimsrelating to their transactions. �25 Although the Chaparral transaction is addressed in thefirst summary judgment against the Winters plaintiffs, StewartTitle is not liable for DeAngio’s actions concerning thattransaction because it occurred entirely at Chicago Title. Noevidence suggests that her work at Chicago Title furtheredStewart Title’s business or fell within the scope of heremployment at Stewart Title. See Wiper, 152 Ariz. at 310, 732P.2d at 201. Therefore, we affirm the trial court’s ruling asit relates to the Chaparral transaction. �26 Regarding the second summary judgment, Stewart Titleis also not liable under respondeat superior to the Bairdplaintiffs because it did not act as their title company – theirtransaction was handled entirely by First American Title. Acontinuing relationship must exist between employee and employerto impose liability on the employer. See Loucks v. CommunityHome Care Services, 618 N.Y.S.2d 826, 827 (N.Y. App. Div. 1994);Restatement (Second) of Agency � 219 cmt. d. �27 We therefore reverse and remand the first and thirdsummary judgments but affirm the second summary judgment.Regarding the Chaparral transaction addressed in the firstsummary judgment, we affirm the trial court’s summary judgmentthat Stewart Title is not liable for DeAngio’s actions regardingthe Chaparral transaction. �28 The Winters and the NPP and CAP plaintiffs also allegeconspiracy and RICO claims against Stewart Title. In the nexttwo sections, we address these claims. Doctrine of conspiracy �29 The appellants claim that DeAngio is liable forconspiracy to defraud and, therefore, Stewart Title incursliability under respondeat superior for all fraud-based claims.We address Stewart Title’s liability for conspiracy as itapplies to each group of plaintiffs and to each summaryjudgment. �30 The preliminary issue is whether DeAngio herself isliable for conspiracy. “For a civil conspiracy to occur two ormore people must agree to accomplish an unlawful purpose or toaccomplish a lawful object by unlawful means, causing damages.”Rowland v. Union Hills Country Club, 157 Ariz. 301, 306, 757P.2d 105, 110 (App. 1988). “[A] mere agreement to do a wrongimposes no liability; an agreement plus a wrongful act mayresult in liability.” Elliott v. Videan, 164 Ariz. 113, 117,791 P.2d 639, 643 (App. 1989) (quoting McElhanon v. Hing, 151Ariz. 386, 392, 728 P.2d 256, 262 (App. 1985)). We assume,without deciding, that DeAngio’s actions in notarizingsignatures she knew to be fictitious or forged, assistingFriedman in impersonating fictitious people, and backdatingdeeds of trust may show that she conspired with Friedman andothers to further his fraud. �31 She may therefore be liable to the Winters and CAP andNPP plaintiffs because she participated directly in Friedman’sfraud. She may also be liable to the Bairds, the subject of thesecond summary judgment, even though First American Titlehandled the escrow, because a conspirator is liable for anytortious act, even unknown, committed in furtherance of theconspiracy, including acts not personally committed. SeeHalberstam v. Welch, 705 F.2d 472, 481 (D.C. Cir. 1983); BeltzTravel Serv., Inc. v. International Air Transp. Ass’n, 620 F.2d1360, 1367 (9 th Cir. 1980). �32 However, the central issue remains whether StewartTitle could be liable under respondeat superior for DeAngio’sacts in furthering the Friedman conspiracy. We find no casethat holds an employer liable for its employee’s acts toperpetuate a conspiracy to defraud under respondeat superior.The absence of such case law may result from the term”conspiracy” generally indicating vicarious liability forconcerted action.
[FOOTNOTE 2] See Franzi v. Koedyker, 157 Ariz. 401, 403,758 P.2d 1303, 1305 (App. 1985). If Stewart Title is liable forconspiracy through respondeat superior, two layers or “double”vicarious liability would result: DeAngio would be liable for aconcerted action she did not personally perform and StewartTitle would be further liable. The nexus between Stewart Titleand all the appellants thereby becomes too remote. �33 We conclude that Stewart Title cannot be liable forconspiracy for DeAngio’s actions relating to the Winters, Bairdsand NPP and CAP plaintiffs.
[FOOTNOTE 3] Earlier we stated that StewartTitle may be liable to the Winters and NPP and CAP plaintiffs,the subjects of the first and third summary judgments, underrespondeat superior; however, it is not liable for any claimsbased on the doctrine of conspiracy. RICO violations �34 Under respondeat superior, the appellants argue thatDeAngio and, therefore, Stewart Title have committed federalRICO violations against all three groups of appellants.
[FOOTNOTE 4] Aviolation of 18 U.S.C. section 1962(c) “requires (1) conduct (2)of an enterprise (3) through a pattern (4) of racketeeringactivity.” Sedima, S.P.R.I. v. Imrex Co., Inc., 473 U.S. 479,496 (1985). A pattern of racketeering requires at least two actsof racketeering activity. See 18 U.S.C. � 1961(5).”Racketeering activity” includes mail and wire fraud and anyoffense punishable under federal law involving bankruptcy orsecurities fraud. See Sedima, 473 U.S. at 482; 18 U.S.C. �1961(1). �35 The plaintiffs must also prove that an enterpriseexisted, that is, “an entity must exhibit ‘some sort ofstructure . . . for the making of decisions.’” Chang v. Chen, 80F.3d 1293, 1299 (9 th Cir. 1996) (quoting U.S. v. Riccobene, 709F.2d 214, 222 (3 rd Cir. 1983)). Moreover, the organization musthave an “existence beyond that which is merely necessary tocommit the predicate acts of racketeering.” Id. The enterprisemust be an entity other than the conspiracy. �36 If we assume, again without deciding, that Friedman’spartnership, the Dartmouth Group, was an enterprise under RICOthat committed a pattern of racketeering,
[FOOTNOTE 5] we must then determineif DeAngio “conducted or participated” in the enterprise’saffairs. In Reves v. Ernst & Young, 507 U.S. 170, 179 (1993),the Supreme Court adopted the “operation or management test” todefine “conduct or participate.” To violate section 1962(c),the defendant “must have some part in directing the enterprise’saffairs.” Id. (emphasis in original). Liability may extend toany person employed or associated with the enterprise if such aperson participates in the enterprise’s operation or management.Id. at 184-85. �37 No evidence exists that DeAngio participated in theoperation or management of the Dartmouth Group. She was, asFriedman stated, a “facilitator,” but no evidence exists thatshe was employed by the Dartmouth Group or participated in ordirected its decisions. Providing some services to theenterprise does not create RICO liability. See University ofMaryland v. Peat, Marwick, Main & Co., 966 F.2d 1534, 1539 (3 rdCir. 1993) (defendant, an accounting and financial servicescompany that allegedly performed misleading financial audits,did not participate in the affairs of the enterprise undersection 1962(c)); Biofeedtrac, Inc. v. Kolinor OpticalEnterprises & Consultants, S.R.L., 832 F. Supp. 585, 591(E.D.N.Y. 1993)(attorney who provided questionable legal adviceshould not be held RICO liable). We conclude that DeAngio isnot liable under section 1962(c) for RICO violations and, thus,neither is Stewart Title. �38 However, DeAngio may be liable under RICO’s conspiracysection, section 1962(d), which makes it unlawful for a personto conspire to violate sections 1962(a), (b) or (c), even if shewas not liable under section 1962(c). See Salinas v. U.S., 522U.S. 52, 59 (1997). However, if she is liable, we concludeStewart Title is not similarly liable under section 1962(d). �39 The federal circuits are split as to whether the Reves’management and control test applies to a RICO conspiracy.
[FOOTNOTE 6] InSalinas, the Supreme Court did not directly address the Reves’test but stated that a person need not personally commit twopredicate acts to be liable under section 1962(d). See 522 U.S.at 64. “A conspiracy may exist even if a conspirator does notagree to commit or facilitate each and every part of thesubstantive offense.” Id. at 63. Conspirators are liable forthe acts of their co-conspirators who agree to pursue the samecriminal objective. Salinas supports the rule adopted by themajority of circuit courts that a person need not participate inthe enterprise’s operation or management to be liable for a RICOconspiracy. �40 Thus, DeAngio may be liable under section 1962(d) ifthe evidence shows that she agreed to facilitate some of theacts leading to the substantive offense. See id. She may be aconspirator without committing an overt act as long she intends”to further an endeavor which, if completed, would satisfy allof the elements of a substantive criminal offense, but itsuffices that [she] adopt the goal of furthering or facilitatingthe criminal endeavor.” Id. at 65. �41 The issue then becomes whether Stewart Title can beliable for DeAngio’s violation of section 1962(d). The Revestest does not apply to Stewart Title because it is not a co-conspiratorand, therefore, any possible liability must stemfrom respondeat superior. Some federal courts have held anemployer liable under respondeat superior for its employee’sviolations of section 1962(c) “when the employer is distinctfrom the enterprise.” Brady v. Dairy Fresh Products Co., 974F.2d 1149, 1154 (9 th Cir. 1992); see also Petro-Tech, Inc. v.Western Co. of North America, 824 F.2d 1349, 1358 (3 rd Cir.1987); Davis v. Mutual Life Ins. Co. of New York, 6 F.3d 367,379-80 (6 th Cir. 1993).
[FOOTNOTE 7] However, neither the federal nor statecourts have addressed whether an employer can be liable for anemployee’s violation of section 1962(d), conspiracy to commitRICO violations. �42 Respondeat superior serves two goals: 1) it encouragesemployers to monitor the activities of their employees to ensurethey are uninvolved in racketeering activities, and 2) it forcesemployers that benefitted from their employees’ RICO violationsto compensate the victims. See Brady, 974 F.2d at 1153-55.Those same goals are met if an employer is held vicariouslyliable under sections 1962(c) and (d). The Supreme Court hasalso stated that the general tenets of conspiracy law apply toRICO. See Salinas, 522 U.S. at 59-65. A civil conspiracyrequires an underlying tort which the alleged conspiratorsagreed to commit. Conspiracy serves as a device to imposevicarious liability for the underlying tort on all who commonlyplan, take part in, or cooperate in the wrongdoers’ acts. �43 If Stewart Title were liable under respondeat superiorfor DeAngio’s acts to perpetuate a conspiracy to defraud,
[FOOTNOTE 8] doublevicarious liability would result. DeAngio’s actions are alreadyremoved from that of her co-conspirators (although she is stillliable for their misconduct), and Stewart Title’s conduct,whatever it be, is even more distant. We therefore concludethat Stewart Title is not vicariously liable to any of the threegroups of appellants for DeAngio’s conspiracy to commit RICOviolations. Attorneys’ Fees �44 The trial court granted attorneys’ fees to StewartTitle because it found appellants’ arguments to be groundless.We disagree given the complexity of the appellants’ argumentsand the split among federal circuits about these RICO issues.For this reason and because we are reversing two of the threesummary judgments, we vacate the trial court’s award ofattorneys’ fees. CONCLUSION �45 We affirm the trial court’s second summary judgmentagainst the Baird plaintiffs. Stewart Title is also not liablefor DeAngio’s actions in connection with the Chaparraltransaction, addressed in the first summary judgment. It cannotbe held liable for unconnected transactions performed by anothertitle company under respondeat superior or common lawconspiracy. �46 We reverse and remand the first and third summaryjudgments against the Winters and CAP and NPP plaintiffsrespectively because DeAngio handled the paperwork and escrowsfor these plaintiffs while employed at Stewart Title, generatingpossible liability under respondeat superior for negligence orfraud. Stewart Title has no liability under conspiracy or RICOclaims. We vacate the trial court’s award of attorneys’ fees. Rudolph J. Gerber, Judge CONCURRING: Philip E. Toci, Presiding Judge Department E E. G. Noyes, Jr., Judge :::FOOTNOTES:::
FN1 She also had assisted him in pretending to be someoneelse for a transaction not covered in this appeal. Such actionshad occurred before the transactions at issue and, therefore,create an inference that she knew that Friedman’s actions,including his otherwise legal opening of escrow accounts underfictitious names, showed fraudulent intent. We must make thisinference because we view the facts in the light most favorableto the party opposing summary judgment. See Hartford Accident& Indem. Co., 172 Ariz. at 107, 834 P.2d at 830.
FN2 Another reason may be that liability is generallyimposed through the employer’s role as a co-conspirator. Here,the appellants do not allege and the facts do not show thatStewart Title was a co-conspirator.
FN3 Moreover, respondeat superior requires an existing orcontinuing relationship for liability. If DeAngio’s wrongfulactions in connection with the first summary judgmentappellants, the Winters, occurred while she worked at ChicagoTitle, Stewart Title is not liable. It also is not liable forthe Baird transactions, the subject of the second summaryjudgment, because DeAngio did not perform any work on thosetransactions.
FN4 18 U.S.C. � 1962. Prohibited activities (a) It shall be unlawful for any person who has received anyincome derived, directly or indirectly, from a pattern ofracketeering activity or through collection of an unlawful debtin which such person has participated as a principal within themeaning of section 2, title 18, United States Code, to use orinvest, directly or indirectly, any part of such income, or theproceeds of such income, in acquisition of any interest in, orthe establishment or operation of, any enterprise which isengaged in, or the activities of which affect, interstate orforeign commerce. A purchase of securities on the open marketfor purposes of investment, and without the intention ofcontrolling or participating in the control of the issuer, or ofassisting another to do so, shall not be unlawful under thissubsection if the securities of the issuer held by thepurchaser, the members of his immediate family, and his or theiraccomplices in any pattern or racketeering activity or thecollection of an unlawful debt after such purchase do not amountin the aggregate to one percent of the outstanding securities ofany one class, and do not confer, either in law or in fact, thepower to elect one or more directors of the issuer. (b) It shall be unlawful for any person through a patternof racketeering activity or through collection of an unlawfuldebt to acquire or maintain, directly or indirectly, anyinterest in or control of any enterprise which is engaged in, orthe activities of which affect, interstate or foreign commerce. (c) It shall be unlawful for any person employed by orassociated with any enterprise engaged in, or the activities ofwhich affect, interstate or foreign commerce, to conduct orparticipate, directly or indirectly, in the conduct of suchenterprise’s affairs through a pattern of racketeering activityor collection of unlawful debt. (d) It shall be unlawful for any person to conspire toviolate any of the provisions of subsection (a), (b), or (c) ofthis section.
FN5 The Dartmouth Group was a general partnershipestablished by Friedman and Lynch to engage in real estateinvestment. It conducted other business besides the real estatetransactions in question. Therefore, it is a separate entityfrom the conspiracy and, most likely, an enterprise under RICO.The trial court did not hear evidence as to whether theDartmouth Group committed a pattern of racketeering.
FN6 The Second, Fifth, Seventh, and Eleventh Circuitsconclude that the Reves test does not apply to section 1962(d).See e.g., United States v. Quintanilla, 2 F.3d 1469, 1484-85(7 th Cir. 1993) (“Reves addressed only the extent of conduct orparticipation necessary to violate a substantive provision ofthe statute” not the conspiracy principles of section 1962(d));accord Napoli v. United States, 45 F.3d 680, 683-84 (2nd Cir.1995); United States v. Posada-Rios, 158 F.3d 832, 857 (5 th Cir.1998); United States v. Starrett, 55 F.3d 1525, 1547 (11 th Cir.1995). The Third and Ninth Circuits disagree and find that itmust apply to a RICO conspiracy. See United States v. Antar, 53F.3d 568, 581 (3 rd Cir. 1995); Neibel v. Trans World AssuranceCo., 108 F.3d 1123, 1128 (9 th Cir. 1997).
FN7 Other circuit courts do not follow this approach andfind that the doctrine of respondeat superior conflicts withsection 1962(c). See Schofield v. First Commodity Corp. ofBoston, 793 F.2d 28, 32-34 (1 st Cir. 1983); Luthi v. Tonka Corp.,815 F.2d 1229, 1230 (8 th Cir. 1987).
FN8 The appellants urge us to find Stewart Titlevicariously liable for DeAngio’s acts to further the conspiracy.However, the case law cited is unpersuasive and distinguishablebecause some involve partnerships, see Elliot v. Videan, 164Ariz. 113, 791 P.2d 639 (App. 1989), United States v. HefFner,916 F. Supp. 1010 (S.D. Cal. 1996), while others involve theSherman Anti-Trust Act, see Nurse Midwifery Associates v. B.K.Hibbett, M.D., 689 F. Supp. 799 (M.D. Tenn. 1988), rev’d onother grounds, 918 F.2d 605 (6 th Cir. 1991).
Baker v. Stewart Title and Trust of Phoenix, Inc. IN THE COURT OF APPEALSSTATE OF ARIZONA DIVISION ONE L. KENNETH BAKER, on Behalf of Hall Brake Supply, Inc., Employee Profit Sharing Plan; RICHARD BERTOCCHI as Trustee of Regal Lighting Fixture Co., Inc. Profit Sharing Plan; SUSAN W. BOYES and WILLIAM J. BOYES, wife and husband; Profit Sharing Plan of Carmen H. Brooks, M.D., P.C.; JAMES E. CAMPBELL a Trustee of James E. Campbell, M.D., P.C. Profit Sharing Plan and Trust; A. LEROY ELLISON as Trustee of the Allen Leroy Ellison Family Trust; W. LEE FANNING M.D., Ltd., Pension Plan; MURRAY E. GOODMAN, as Trustee of Goodmans Inc. Defined Benefit Pension Plan; HARRY W. HALE, JR., M.D. as Trustee of the Hale FamilyTrust; RICHARD L. HENDERSON and BARBARAA. HENDERSON, husband and wife; LAWRENCE KOEP as Trustee of the Erik Kenneth Koep Trust; ROBERT E. LEBER, M.D. as Trustee of the Robert E. Leber,M.D., P.C. Profit Sharing Plan; W. STEVEN LEEPER, M.D. as Trustee of the W. Steven Leeper, M.D., P.C. Profit Sharing Plan; ALAN H. MANAS, M.D. as Trustee of the Sun City Eye Consultants, LTD. Employee DBPP;VICENTEG. MORTEL, M.D. as Trustee of the Vicente Mortel, M.D., LTD. Profit Sharing Plan; GUARANTEE AND TRUST COMPANY, as Trustee for the Benefit of Walter J. Nieri, M.D., IRA Rollover, and Geraldine McGartland, former spouseof Walter J. Nieri, M.D.; NMM LIMITED PARTNERSHIP; RICHARD T. PERRY, M.D. as Trustee of Richard T. Perry, M.D., P.C., FACS; DR. CHARLES M. RUCKER as Trustee of the Arizona Heart and Lung Surgeons, LTD. Retirement Plan; ALFRED D. SACHS and FRANCES T. SACHS as Trustees of the Sachs Family Trust; HOWARD M. SEGAL; SOUTHWEST MEDICAL SPECIALIST, P.C. Amended and Restated Employee Pension Plan and Trust, including one-half interest currently held by Jerome G. Bickel, Smith BarneyShearson, IRA R/O Custodian; ROBERT H. TAMIS, M.D. as Trustee of Robert H. Tamis, M.D., P.C. Employee Pension Plan; IAN A.D. TODD; DAVID R. TOWAR as President and Trustee of Phoenix Dog & Cat Hospital Pension Plan; BEN A. VANDERWERF, M.D. as Trustee for PhoenixTransplant and Vascular Surgery Employee’s Pension Plan; FRED YERGER, M.D., PAUL WASSERMAN, M.D., W. LEE FANNING, M.D. and STEVEN DIPPE, M.D., Officers of the Scottsdale Medical Specialists Ltd. Defined Benefit Pension Plan; ARIZONA CHEST PHYSICIANS EMPLOYEES’ PENSION PLAN; ArMA MEMBERSHIP BENEFITS, INC., IRA Custodian FBO William E. Dozer, M.D., IRA Rollover; L. KENNETH BAKER, on Behalf of Hall Brake Supply Inc. Employee Profit Sharing Plan; RICHARD BESSERMAN, SMITH BARNEY SHEARSON, IRA R/O Custodial (Richard and Rosalie Besserman); DALE BLOCK and MARSHALL B. BLOCK; H.H. BUCHMAN, II, M.D.; JAMES H.CARLISLE, M.D. as Trustee of James H. Carlisle, M.D., F.A.C.S., P.C. Employees’ Pension Plan; MARK R. COHEN,M.D. as President of Mark R. Cohen, M.D., P.C.; DAVID J. CROSBY, M.D. and ELEANOR CROSBY as Trustees of D & E Investment Co.; BEVERLY E. FLENTJE; Estate of DOROTHY A. FOX; RANDALL J. FOX; RONALD S. GARLIKOV, M.D. and REDA S. GARLIKOV, husband and wife; RONALD S. GARLIKOV, M.D. as Trustee of Southwest Eye Surgeons Profit Sharing Plan and Trust; DAVID GOLDFARB, M.D. asTrustee of David Goldfarb, M.D., P.C. Profit Sharing Plan; DAVID GOLDFARB, M.D. and JOAN GOLDFARB, husband and wife; ALBERT HAHN and JAMES COOLEY as Trustees of Cohaco Building Specialists, Inc. Money Purchase Pension Plan and Trust; DOUGLAS HILTON; ROBERT E. LEBER, M.D. as Trustee of the Robert E. Leber, M.D., P.C. Profit Sharing Plan; LEWIS EQUIPMENT PROFIT SHARING PLAN & RETIREMENT TRUST; ROBERT S. LEWIS, M.D. as President of Ophthalmic Surgeons & Physicians Ltd. Pension Plan; JOHN MacLEOD DIVERSIFIED, INC. Employees Pension Plan; STANLEY J. MARKS; MAX MINUCK, M.D., individually, and as Trustee and Representative of the Estate of Estelle Minuck; JOHN A. PIFER; WILLIAM J. SALOMON AND SAUNDRA E. SALOMON, husband and wife; HOWARD M.SEGAL (aka Howard Segel); JANE SIEGEL; ALLAN B. STARR; PETER THOMAS, M.D. as Trustee of Thomas Laser Centers MedicalGroup Ltd. Profit Sharing Plan; BEN A. VANDERWERF, M.D. as Trustee for PhoenixTransplant and Vascular Surgery Employee’s Pension Plan; QUAIL RUN AIRPARK LIMITED PARTNERSHIP; OX BOW AIRPARK LIMITED PARTNERSHIP; CHAPARRAL AIRPARK LIMITED PARTNERSHIP; KACHINA AIRPARK LIMITED PARTNERSHIP; NORTH BLACK CANYON PROPERTIES I LIMITED PARTNERSHIP; CACTUS VIEW PROPERTIES LIMITED PARTNERSHIP; PALO VERDE VALLEY II LIMITED PARTNERSHIP; PINNACLE PEAK PROPERTIES LIMITED PARTNERSHIP, Plaintiffs-Appellants, v. STEWART TITLE & TRUST OF PHOENIX, INC., Defendant-Appellee. 1 CA-CV 99-0211 DEPARTMENT E Filed 5-2-00 Appeal from the Superior Court of Maricopa County Cause No. CV 94-14691 The Honorable Joseph D. Howe AFFIRMED IN PART; REVERSED AND REMANDED IN PART Bonnett, Fairbourn, Friedman & Balint, PC (Phoenix)by Andrew S. Friedmanand Wendy J. Harrison Attorneys for Plaintiffs-Appellants Howard & Rouse, PC (Phoenix)by Gary F. Howard Attorneys for Defendant-Appellee
