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Murphy v. Gospel For Asia, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

May 29, 2018

GARLAND D. MURPHY, III, M.D., and PHYLLIS MURPHY, Individually and on behalf of all others similarly situated PLAINTIFFS
v.
GOSPEL FOR ASIA, INC.; GOSPEL FOR ASIA-INTERNATIONAL; K.P. YOHANNAN; GISELA PUNNOSE; DANIEL PUNNOSE; DAVID CARROLL; and PAT EMERICK DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE

         Currently before the Court are a Motion for Judgment on the Pleadings (Doc. 68) and Brief in Support (Doc. 69) filed by Defendants Gospel for Asia, Inc. ("GFA"), Gospel for Asia-International, K.P. Yohannan, Gisela Punnose, Daniel Punnose, David Carroll, and Pat Emerick. Plaintiffs Garland Murphy and Phyllis Murphy have filed a Response in Opposition (Doc. 89).[1] For the following reasons, Defendants' Motion is DENIED.

         I. BACKGROUND

         This lawsuit centers on Plaintiffs' allegations that Defendants and their international partners have defrauded donors by diverting donations earmarked for specific purposes to different uses without these donors' knowledge. Plaintiffs have brought several causes of action against the named Defendants, including an alleged violation of the Racketeer Influenced and Corrupt Organizations ("RICO") Act and fraud.

         II. LEGAL STANDARD

         As an initial matter, the difference between a motion for judgment on the pleadings brought under Federal Rule of Civil Procedure 12(c) and a motion to dismiss brought under Rule 12(b)(6) "is purely formal, because we review [a] 12(c) motion under the standard that governs 12(b)(6) motions." Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990).

         Just as with a motion to dismiss, to survive the motion for judgment on the pleadings, Plaintiffs' Complaint must provide "a short and plain statement of the claim that [the plaintiff] is entitled to relief." Fed.R.Civ.P. 8(a)(2). The purpose of this requirement is to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court must accept all of a complaint's factual allegations as true, and construe them in the light most favorable to the plaintiff, drawing all reasonable inferences in the plaintiff's favor. See Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). The complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

         "Judgment on the pleadings is not properly granted unless the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law." United States v. Any & All Radio Station Transmission Equip., 207 F.3d 458, 462 (8th Cir. 2000); see also Wishnatsky v. Rovner, 433 F.3d 608, 610 (8th Cir. 2006).

         III. DISCUSSION

         Plaintiffs allege that Defendants have violated the RICO Act, codified at 18 U.S.C. § 1962(c).[2] That section makes it "unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." As a result of the statutory language, two principles are clear. First, "the person named as the defendant cannot also be the entity identified as the enterprise." Atlas Pile Driving Co. v. DiCon Fin. Co., 886 F.2d 986, 995 (8th Cir. 1989). Second, "[plaintiffs] cannot circumvent the distinctness requirement by 'alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.'" Anatian v. Coutts Bank (Switzerland) Ltd., 193 F.3d 85, 89 (2d Cir. 1999) (emphasis added).

         Defendants premise their Rule 12(c) motion on an argument that Plaintiffs' Complaint fails to satisfy this enterprise element because it does not allege a separate "RICO person" and "RICO enterprise, " and because the alleged enterprise does not meet the "distinctness" requirement noted above. The Court considers each argument in turn.

         First, the Court rejects the argument that the Complaint names the same entity as a RICO person and a RICO enterprise and is thereby deficient as a matter of law. Under governing law, a RICO enterprise is defined as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 USC § 1961(4). The latter part of this description, representing so called "association-in-fact" enterprises, may be proven by evidence that a "group of persons associated together for a common purpose of engaging in a course of conduct" committed predicate acts necessary to establish a violation. United States v. Turkette, 452 U.S. 576, 583 (1981); Nelson v. Nelson, 833 F.3d 965, 968 (8th Cir. 2016).

         Viewing the Complaint holistically and drawing all reasonable inferences in Plaintiffs' favor, as it must on a 12(c) motion, the Court concludes that the allegations in the Complaint make clear that GFA was simply one member of a RICO enterprise consisting of all of the named Defendants. This is more than sufficient to allege a plausible association-in-fact enterprise. Atlas, 886 F.2d at 995.[3]

         Defendants' second argument fares no better. They assert that Plaintiffs' Complaint alleges a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant. (Doc. 69, pp. 1-2). That contention ignores the Complaint's discussion of other entities, such as Believers Church, Gospel for Asia-India, Last Hour Ministries, and Love India Ministries. See Doc. 1, p. 3. It also ignores that this Court has already ruled on a Motion to Stage Alter Ego Issues After Verdict (Doc. 60), which centered around the discovery of at least 76 foreign entities, all of which are alleged to be affiliates or ...


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