Petition for Writ of Certiorari — Consol Pennsylvania Coal Co. v. Hughes

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§i- I 561 Bupreme Coun, US

= FILED

In The MAR 19 1992

Supreme Court of the United LSS

October Term, 1991

JAMES E. HUGHES, et al.,

Petitioners,

LAY

CONSOLIDATION COAL COMPANY, er ai/.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

LOUIS M. TARASI, JR.

Counsel of Record

TARASI & JOHNSON, P.C.

510 Third Avenue

Pittsburgh, Pennsylvania 15219

(412) 391-7135

DAVID C. HOOK

HOOK & HOOK

Fort Jackson Building

Waynesburg, Pennsylvania 15370

(412) 627-6146

Attorneys for Petitioners

1746

Paes ny NJ (908) 257-6850¢(800) 3 APPEAL*NY (212) 840-4640°MA (617) 542-1114

a dh Lada LA hee eee Db! Adee OLD aee es Dee fe

QUESTIONS PRESENTED

1. Did not the District Court and the Third Circuit abuse

their discretion in unconstitutionally denying just compensation

to the petitioners?

2. Are not the Circuits creating different rigid time periods

in their interpretations of what periods of time amounts to a

pattern which is contrary to H.J. Inc.’s flexible approach and

petitioners’ case would have been decided differently by the courts

sitting in the Sixth, Seventh and Second Circuits? The Third Circuit

now holds that 12 months or | year of RICO violations are for

free.

3. Did the District Judge and the Third Circuit have the

constitutional power to grant judgment n.o.v. after a jury made

specific findings of RICO violations?

LIST OF INTERESTED PARTIES

The petitioners are: James E. Hughes; Linda L. Hughes;

Dorothy Loughman; Paul H. Kent; Mabel Kent; James C.

Mcintyre; Glenna Mcintyre; Larry Levine; Dan Levine; Morris

Levine: Edward Levine; Morris Levine Enterprises, Inc.; Levine

Iron & Metal Inc.; John W. Yesensky Jr.; Linda M. Yesensky;

Thomas J. Allen and Estate of John T. Throckmorton; Mark

E. Headlee; and Charlotte B. Headlee.

The respondents are: Consol Pennsylvania Coal Company;

Greenon Coal Company (formerly Rheinbraun U.S. Corporation);

The Monongahela Railway Company; Consolidation Coal

Company; Consol Land Development Company; Maria Theresia

Bergbaugesellschaft mbH; and Rheinbraun A.G.; William Reese;

‘David Boggs; Ewing Pollock; Pollock, Pollock and Thomas; The

Upshur Agency, Inc.

ee SS = : : _—

iii

TABLE OF CONTENTS

Page

Questions Presented .......-..-. 0-22 essere reece eres i

List of Interested Parties .............0- 2s ee cece eeees il

TE PEPE ET ECE ELE iil

ccc ch nsdn ek creas etawensa causes iv

Opinions Below ..........---- see e eee e cere eee e eee i

Statement of Jurisdiction.............. 0. eee e ee ee eee 2

Constitutional Provisions and Statutes Involved......... 2

A. Just Compensation ..............ee eee eee eeees 2

8 EES ee ee Tee re ee eee 2

Statement of the Case .......... 22: e eee eee eee eee 3

A. Factual Statement .............-. eee eee eens 3

ec cca ean ccescssesousseseenanes 13

Reasons for Granting the Writ...........-.-.-0+25+-+5 15

I. Just Compensation ............-..--:eeeeeeeee 15

eee Gye bancenssnsactsccsasasaaes 16

Contents

Page

A. The District Court and the Third Circuit Abused

Their Discretion in Unconstitutionally Denying

Just Compensation to the Petitioners. ...... 18

B. The Circuits Are Creating Different Rigid Time

Periods in Their Interpretations of What Period

of Time Amounts to a Pattern Which Is

Contrary to H.J. Inc., Flexible Approach and

Petitioners’ Case Would Have Been Decided

Differently by the Second, Sixth and Seventh

ore ty rrr rrr rte 20

C. Did the District Judge and the Third Circuit

Have the Constitutional Power to Grant

Judgment N.O.V. After a Jury Made Specific

Findings of RICO Violations and Creates a

Loophole for Future Violators. ......-.---- 25

ne oo lao MAB Re as END SATAN PAE ERS ER 29

TABLE OF CITATIONS

Cases Cited:

Barticheck v. Fidelity Union Bank/First National Bank, 832

F.2d 36 (3d Cir. 1987) ........-. 2 eee eee cece ences 14

Chase Manhattan Bank N.A. v. Malatesta, CCH RICO

Business Disputes Guide {7510 (S.D.N.Y. 1990)

De ed ok d da eedks RuWAbe bubs Le Saae ee wenweee i. i a

Dyna Best Inc. v. Yao, 760 F. Supp. 704 (N.D. Ill. 1991)

PPP MIP reTeT Ty Pere rr rr eT TIT yy Trt 18, 21

Contents

Page

H.J. Inc. v. Northwestern Tel. Co., 109 S. +e sees

rere rn yon wee i, 14, 16, 17, 18, 20, 21, 22, 23, 28

Hughes v. Com. Dept. of Trans., 514 Pa. 300, 623 A.2d 747

1, 1) Peewee reee rrr eerie teers ole ae 19

Hughes v. Consol Pennsylvania Coal Co., 945 F.2d 594 (3rd

. a. | errr rr Tree rer 1, 18, 21, 22, 24, 26

Lowenstein v. Pepsi-Cola Bottling Co., 536 F.2d 9 (3rd Cir.),

cert. denied, 429 U.S. ___, 975 S. Ct. 396, 60 L. Ed.

Bb 396 CIFTD) 0a ociccacccscuswesnevaadensansesas 25

Seaboard Air Line Railway Company, et al. v. United States,

261 U.S. 299, 43 S. Ct. 354, 67 L. Ed. 664 (1924)

ee caus ule deus ee Peake ee eae keee se eae eeee 15, 18

Sedima, S.P.L.R. v. Imrex Co., 473 U.S. 479 (1985)

EPPO PFO Te TOC eT er ry he 16

Sun Savings and Loan Association v. Dierdorff, 825 F.2d

187 (9th Cir. 1987) ..... 0... ec cee eee eee e tence 23

Swistock v. Jones, 884 F.2d 755 (1989) .......---+-+-- 24, 25

United States v. Blankenship, 543 F.2d 1272 at 1274 (9th Cir.

tL, PPE PERTE eT T Tree ee, 19

che ccdahesaeeadbueees uu keeae ee ONeeeees araeee 17

Contents

Page

Statutes Cited:

5B U.S.C. © RGN isn vccce since Nicene sa rexeens 16

18 U.S.C. § IGGL, GP ORG. oon ccc sie eee rie tee cane 2

T Rik com 2. oe Mercere ee 3,43

28 U.S.C. § 1254G) (IGEB) 2... cece eces acne cesecccass 2

United States Constitution Cited:

Fifth Amem@ment . ow. oc cece cece sce erennsueuseseebess 2, 18

Rule Cited:

Sam. Ce. Be Gb a cain tacensunesseensaesesvanves 2

Other Authorities Cited:

Pa. Comm. Aat. 1,0: 0B i. occ wnt cescnkateetacsennances 18

Pe, Comm. Ast. 10, © Gc. ccs dewcineceeaceceseeewee ree 18

Securities & RICO Update, January 1992, Michael A. Bertz,

BOR. vcd ivescdeerenceeavasseeeaguae+enmeeaes 25

Volume 84, Statutes at Large, Section 904 ............. 3

vil

Contents

Page

APPENDIX

Appendix A — Amended Opinion and Order of the United

States Court of Appeals for the Third Circuit Filed

December 20, 1991 ........ccccrcccccvcccesecccees la

Appendix B — Memorandum Order of the United States

District Court for the Western District of Pennsylvania

Dated June 18, 1990. ......... cece sccsecccceees 70a

Appendix C — Memorandum of the United States District

Court for the Western District of Pennsylvania Dated

Maarchs 1, 19D... ccc cece rece n seve sensessveress 80a

Appendix D — Memorandum Opinion of United States

District Court for the Western District of Pennsylvania

Dated May 17, 1988.........-.. eee eee teens: 94a

Appendix E — Memorandum Opinion of the United States

District Court for the Western District of Pennsylvania

Dated October 22, 1987..........2 2c eee cece reece 104a

Appendix F — Verdict........-----ssseeereee reece 118a

Fy eS ee

———

ee ee ee

es:

Ps.

No.

In The

Supreme Court of the United States

October Term, 1991

JAMES E. HUGHES, et ai.,

Petitioners,

VS.

CONSOLIDATION COAL COMPANY, ef ai.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

OPINIONS BELOW

The final decision of the United States District Court for

the Western District of Pennsylvania on the matters at issue on

this appeal was filed on March 1, 1990. It is set forth in Appendix,

infra at 80a-93a, and has been officially reported at 740 F.

Supp. 1114 (W.D. Pa. 1990). The opinion of the United States

Court of Appeals for the Third Circuit, is reported at 945 F.2d

§94 (3d Cir. 1991). The amended opinion of the United States

Court of Appeals for the Third Circuit of Pennsylvania dated

December 20, 1991, on petition for rehearing is reproduced in

Appendix, infra at la-69a (amended and restated opinion).

STATEMENT OF JURISDICTION

The amended judgment of the Court of Appeals was entered

on December 20, 1991. This petition for a writ of certiorari was

filed within 90 days of that date. Sup. Ct. R. 13.1. This Court

has jurisdiction to review the judgment of the Court of Appeals

by writ of certiorari pursuant to 28 U.S.C. § 1254(i) (1988).

CONSTITUTIONAL PROVISIONS

AND STATUTES INVOLVED

A. Just Compensation

The Fifth Amendment to the United States Constitution

provides in pertinent part:

. . . Nor shall private property be taken for public

use, without just compensation.

B. RICO

The statutory provisions of Title 18, United States Code,

§ 1961, ef seq., Title IX (RICO) of P.L. 92-1452, in relevant part

provides:

§ 1961. Definitions.

As used in this chapter —

(5) ‘‘pattern of racketeering activity’’ requires at

least two acts of racketeering activity, one of which

occurred after the effective date of this chapter

and the last of which occurred within ten years

(excluding any period of imprisonment) after the

commission of a prior act of racketeering activity;

§ 1962

(d) It shall be unlawful for any person to conspire

to violate any of the provisions of subsections. . .

The relevant statutory provisions contained in Volume 84

of the Statutes at Large at 947 provides:

Section 904.

(a) The provisions of this title shall be liberally

construed to effectuate its remedial purposes.

(b) Nothing in this title shall supersede any

provision of Federal, State, or other law imposing

criminal penalties or affording civil remedies in

addition to those provided for in this title.

STATEMENT OF THE CASE

A. Factual Statement

This case does not involve a garden variety fraud perpetrated

upon the petitioners and others. The facts and the conduct of

these defendants read like a chapter from the history of the

nineteenth century robber barons. The respondents used their huge

and vast corporate powers and resources to threaten, defraud,

and coerce the landowners in Greene County to sell their land,

including in most cases their homies, to the respondents at

significantly depressed prices for use as railroad right-of-way

property. These respondent corporations needed these rights-of-

way to service two vast coal reserves they wished to exploit. One

reserve is called the Manor Reserve, the other one the Nineveh

Reserve.

There are two railroad rights-of-way involved in this scheme.

One is the 14.5-mile rail line to the Manor coal reserve which

is the subject of this suit. This rail line travels over the petitioners’

former properties. The second is an unconstructed right-of-way

for a 6-mile rail line from the Sycamore junction with the first

rail line through the valley to Swartz, Pennsylvania and ultimately

the Nineveh coal reserve. This rail line has not been constructed

as of this date (TR1, 892-893, Ex. 137).

On August 4, 1977, Monongahela Railway Company

(Monongahela)' identified to U.S. Steel, the then owner of the

Manor reserve, the legal problems in acquiring the railroad right-

of-way for the coal mines at the Manor coal reserve to a line

of a railroad in Waynesburg, Pennsylvania (the 14.5-mile right-

of-way involved in this action) (TR1, Ex. 13).’

Aware of the legal problems, Consolidation Coal Company

(Consol) asked its attorney, Ewing Pollock, for his advice. On

October 24, 1978, Pollock wrote and advised Consol that they

should lay out the rail line and then ‘‘approach the property owners

with a figure they can’t refuse’ (TR1, Ex. 220).’

1. In 1977 the United States Steel Corporation owned the rights to the

Manor Coal Reserves. A few years later Consol acquired the rights to this reserve.

Consol already had owned the rights to the Nineveh Coal Reserves.

2. TRI refers to the trial record of the first trial.

3. Acquisition of property of petitioners Mark and Charlotte Headlee was

(Cont'd)

On April 30, 1979 concerning the right-of-way to the Nineveh

Coal Reserve (the unbuilt 6-mile right-of-way), Ewing Pollock

advised Consol that without a right of condemnation,

I do not think it possible for a corporation to build

a railroad or pipeline today. Any intervening

landowner would be able to hold up the purchase

of such strip of ground.

(TR1, Ex. 40 page 2).

On March 5, 1980 Ewing Pollock advised Consol as follows:

It is also my opinion that a coal company does

not have the power of eminent domain and

therefore would have to pay the price demanded

to acquire right-of-way property for a railroad.

Therefore, if any railroad can be convinced to exert

its right of eminent domain for the purchase of

a right-of-way over which it will in the future haul

freight from a coal operation, this would in the

long run be the most economical, the quickest, and

from the point of view of public relations, the most

desirable.

(TR1, Ex. 29 page 4).

This is exactly what defendants did. The whole acquisition

(Cont'd)

part of Consol’s plans to acquire a right-of-way to either the Nineveh or Manor

coal reserves. It lay in the way of both routes. Pollock, in his letters, notes

that this property and the property of their neighbor, Grover Phillippi, could

not be easily obtained (TRI, Ex. 220). Both properties in fact were obtained:

Phillippi’s by arm’s length negotiations; Headlee’s by fraud.

scheme of the approximately 52 properties involved in this case

was a sham. Without the sham, as Pollock pointed out, the coal

company would have to pay whatever price the landowners

demanded for these rights-of-way.

On August 31, 1981, Consol received a letter opinion from

its special counsel, Eugene Gulland of Covington & Burling in

Washington, D.C. pointing out the serious problems involved in

acquiring these rights-of-way. The opinion assumed a best case

scenario concerning the land acquisitions and concluded that there

was ‘‘a not insubstantial risk’’ that there would be no power of

eminent domain under the circumstances. Gulland warned Consol

that it was required to be completely truthful in acquiring the

right-of-way land. In pertinent part, the letter said,

The cases we have reviewed (including a number

of Pennsylvania urban redevelopment cases) tend

to confirm the principle that, absent fraud and

concealment, the power to condemn should be

judged on the basis of whether the ultimate use

to which the land will be put is a valid public

purpose. This is consistent with the analysis in our

memorandum of 17 June 1981 and with what we

have told you about the importance of making sure

that all effected persons are advised fully and

truthfully about the circumstances surrounding

Consol’s efforts to acquire property for use as a

railroad line by which Monongahela would serve

the Manor mine.

(Emphasis added) (TR1. Ex. 12 page 2).

In spite of this legal advice, Consol, having acquired the

Manor and Nineveh coal reserves in Greene County, Pennsylvania,

fraudulently acquired the needed railroad right-of-way to get the

coal from these reserves to market in this country and all over

the world.

The corporate arrangements in this conspiracy were as

follows: In December, 1980, an agreement to open the Manor

and Nineveh coal reserves in Greene County was reached in

Cologne, West Germany when Consol and Rheinishe

Braunkohlenwerke, A.G. (‘‘Rheinbraun, A.G."’) signed a letter

of intent to develop these reserves. The interests in the development

project were Consol, 76%, Rheinbraun A.G. 24%. Ultimately,

at a closing in October, 1981, an affiliate of Rheinbraun, A.G.,

Maria Theresia Bergbaugesellshaft MbH, entered into a

partnership agreement with Consol to finance the project. The

partnership subleased the reserves to a joint venture of two affiliate

corporations, Consol Pennsylvania Coal Company and

Rheinbraun U.S. Corporation. The joint venture was governed

by the so-called OJV (operating joint venture) agreement (TRI,

Ex. 35).

The over-all agreement was to develop and build five coal

mines, for the Manor and Nineveh reserves, the first mine to be

operational in 1983, possibly the second in 1987, and the others

thereafter (TR1, Ex. 3). Consol and Rheinbraun are now acquiring,

through Ewing Pollock, property for the 6 mile right-of-way to

the Nineveh Reserve (TR1, 846). The map used at trial shows

both these reserves with the present right-of-way built to the Manor

Reserve. Also there physically lies on the ground a 200-foot

unfinished section of the new 6-mile right-of-way to be built to

service the Nineveh Reserve. The unfinished section was seen by

the jury during a view.

In the summer of 1981, Consol made the arrangements

suggested by Ewing Pollock in his 1980 letter, with the

Monongahela, a nearly bankrupt railroad, to use the railroad’s

power of eminent domain to acquire land for the benefit of Consol

(and its partner) for the rail right-of-way from the proposed mine

to the Monongahela’s branch line in Waynesburg, Pennsylvania.

Consol had made overtures to other railroads about a similar

arrangement, but had been unable to reach an agreement because

the railroads questioned the legality of the sham. Later, Consol,

through another of its subsidiaries Consol Land Development Co.,

contacted the Upshur Agency, a West Virginia land service

company, concerning providing of land agents to contact the

landowners and acquire the land for the 14.5 mile rail right-of-

way to the Manor Reserve.

At a meeting held on August 27, 1981, at Consol’s

headquarters in Library, Pennsylvania, representatives of Consol,

Upshur and Monongahela met concerning the right-of-way project

of 14.5 miles to the Manor Reserve. Notes of that meeting show

that the second 6-mile right-of-way project, to the Nineveh

Reserve, was also planned and discussed (Ex. 24). At that meeting

all agreed that Upshur would acquire the right-of-way in the name

of the Monongahela Railway Co. in trust for Consol Consol,

would pay the landman, identify the properties to be acquired,

and pay for all of the costs of the project including all costs of

acquiring the property and the construction of the railroad.

On September 30, 1981, Consol, Monongahela and Upshur

signed a Property Acquisition Agreement. This document

memorialized the earlier understanding that Upshur was to acquire

the land on behalf of Consol in the name of the Monongahela

Railway Company (TRI, Ex. 1). The approximately fifty two (52)

properties, which include the properties in issue in this proceeding,

were acquired pursuant to this Property Acquisition Agreement.

In March 1982, Consol, the railroad, and Upshur revised the

Property Acquisition Agreement. A agreement signed two years

later in 1984 makes clear that Consol owns the land and track

and for the first time gives Monongahela certain operating rights

over the track.

On October 29, 1981 after the construction of the rail line

began, the Rheinbraun corporations discovered that there was

some difficulty in acquiring the rights-of-way to get the coal from

the reserves to the railroad and to market (specifically the Culp

property). Rheinbraun insisted and received addendum to their

overall agreements providing the following: If the right-of-way

were not obtained in one year, they could withhold 12.5 million

dollars of their 75 million dollar investment in the project, and

further, they had the right each year thereafter, for four years,

to withhold another 12.5 million dollars per year. At the end of

five years, if the right-of-way was not obtained, they had the right

to withdraw entirely from the project including their 75 million

dollar investment (TRI, Ex. 3, Ex. 4, Ex. 5, Ex. 6).

Therefore time was crucial and of the essence in this

fraudulent conspiracy. The Upshur Agency, day after day,

represented to all the landowners that it dealt with, including the

attorneys that they dealt with, that Consolidation Coal was not

involved in this acquisition at all, and that only Monongahela

Railroad Company was involved. See. e.g., Consol arranged to

* _ have this falsehood told because it did not want the railroad’s

power of condemnation challenged since it feared that the

arrangements would be held to be a sham — a private coal

company using the railroad’s power to condemn so as to

fraudulently obtain the plaintiffs’ property. Consol knew that legal

proceedings challenging the arrangement could take years to

resolve. Consol knew it only had five years to complete the

acquisition or risk loss of an investor and a large investment of

75 million.

The Upshur Agency represented to all landowners that they

would only receive a fixed price for their property if they dare

challenge the acquisition (a lie) and that certain large portions

of the money they received was tax free (another lie).

Defense counsel in his opening statement conceded the motive

for haste and avoiding legal delays.

And I am sure you have all heard, as we all have,

the old saying that time is money, time is money.

So that any delay when you have an investment

of that magnitude, anything that delays the project,

delays the day when the coal can be extracted form

the ground and carried to market and sold,

anything that delays that has a fierce cost attached

to it, a hugh cost to delay the use of that investment

to the time when it becomes profitable.

(TRI, 17-18).

We turn now briefly to show how Consol and its various

agents displayed their way of doing business. They did this time

and time again to landowners who brought this action and other

landowners who testified at trial. Respondents did not present

any evidence that they treated even one landowner honestly.

Therefore the jury could infer this conduct was the same for all

52 property owners. A review of one case shows the respondents’

techniques. Mark and Charlotte Headlee were a typical example

of the respondents’ way of doing business. In 1980, before Upshur

was involved, Ewing Pollock approached the Headlees and asked

if they would be interested in selling their property. The Headlees

said no — even for a quarter of a million dollars.

Thereafter, in 1981, after years of planning this fraudulent

scheme and when the Upshur Agency had been retained by the

respondents, David Boggs,the Vice President of the Upshur

Agency approached the Headlees. Mr. Boggs, in answer to a direct

question, told the Headlees that he represented the Monongahela

Railway Company and no one else.* Boggs told the Headlees they

(the railroad) had the power to take their property and pay only

$700 an acre (TRI, 20), and ‘‘that they could put the railroad

tracks within ten feet of our home’’, which would effectively

destroy the value of their home (TRI, 27). Charlotte Headlee,

fearing for the safety of her two small boys, asked about fencing

and safety. Mr. Boggs said that safety was the Headlees’ problem,

that they had to build their own fence and that the railroad had

no obligation in that regard.

Ultimately, Boggs offered $175,000 for their entire property.

When the Headlees asked about seeing a lawyer, Boggs threw

down his brief case and told them that all a lawyer would do

is take their money, that seeing a lawyer would not get them any

more money and that they better take the deal (TRI, 102).

Thereafter, Boggs returned to the Headlees, and told them

that he could pay them only $168,000 for their property, and they

had no choice but to take it. He told them that $108,000 would

be tax free, a false statement. The frightened Headlees took Mr.

Bogg’s deal.

At the closing held at the offices of Pollock, Pollock &

Thomas, Ewing Pollock’s firm, the Headlees were told that they

could not get $108,000 tax free, but instead only $28,000 was

tax free. The rest would be taxable.’ This statement even as to

4. Boggs had signed the Property Acquisition Agreement involving Consol,

the railroad and Upshur. What Boggs said was demonstrably untrue, and he

knew it.

5. The Headlees were audited by the Internal Revenue Service. They had

to pay additional taxes and interest because none of the $28,000 was tax free.

No penalties were paid, as Agent Revak of the IRS testified, because the

landowners on the right-of-way were honest people who had been given the

wrong information (TRI, 749-750).

the $28,000 was false.

The other landowners were lied to, threatened and coerced

by the use of the same type of conduct and fraudulent techniques.

The Yesenoskys, whose son was afflicted with acute asthma, were

told that if they did not sell that they did not have a lawful access

to their property. The Yesenoskys sold their 3.6 acre land for

$67,000. The Levines, the owners of two small businesses, were

told that with respondents’ vast legal and financial resources they

would ‘‘crush’’ the Levines. All of the landowners testified to

similar threats and treatment. The properties were acquired in

the name of ‘‘Monongahela Railroad Corporation’’ concealing

the identity of the true acquirer Consol (which lacked the power

of condemnation). The petitioners were told that if they refused

to sell. Monongahela would exercise its power of eminent domain

and give a fixed price per acre upon condemnation.

Only three landowners were knowledgeable as to the true,

fair and correct market value. for their property and dealt at arm’s

length: John Culp, Sarah Closser and Grover Phiilippi. Culp,

a professional land speculator purchased land in the right-of-way

because it was right-of-way property. Grover Phillippi was

represented by an assistant county solicitor who specializes in

condemnation law, and Sarah Closser was represented by David

Hook, a young lawyer who discovered by accident the massive

fraud of defendants.* Culp received a million dollars for thirteen

acres, Phillippi received $600,000 for five acres and a $160,000

siding, and Closser received $470,000 for two acres. Despite so

many representations about the eminent domain power, no land

was ever condemned.

Despite the proof of this scheme at trial and the 30-page

6. Sarah Closser did not sell to the railroad. She sold her land directly

to Consol and Rheinbraun (through their affiliates) (TRI, Ex. 102).

verdict slip consisting of 539 written interrogatories which the

jury answered consistently and found that respondents committed

acts in violation of 18 U.S.C. § 1962, et seq., the District Court

and Circuit Court found in reversing the jurys’ verdict that

‘*defendants worked a single-scheme, single-victim (albeit a class

of victims) operation that lasted one year at most.’’ (50a).

B. Procedure

On April 19, 1983, nine petitioners filed eight complaints

against Consol; Consol-Pa, Consol Land Development Company;

Monongahela; RBW; MTB; Ewing Pollock, Esquire; his law firm,

Pollock, Pollock & Thomas; Upshur; and Upshur agents David

Boggs, William Reese and Mike Wilson. Plaintiffs alleged

violations of RICO, civil conspiracy and common law fraud. One

petitioner, Dorothy Loughman, also alleged attorney malpractice

against Pollock. All eight complaints were consolidated for trial

purposes.

Respondents moved for partial summary judgment on

petitioners’ claim that Upshur agents misrepresented

Monongahela’s power of eminent domain. They contended

Monongahela had the power to condemn petitioners’ properties.

On August 6, 1987, the District Court granted respondents’

motion, but sent the remaining claims of fraudulent

misrepresentation, RICO violations, and civil conspiracy to the

jury. The jury was given and filled out consistently, a 30-page

verdict slip consisting of 539 written interrogatories (Appendix

118a). The jury was also given pertinent portions of the RICO

Statute during their deliberations. The jury found all of the

respondents liable except William Reese and Mike Wilson, and

awarded $5,360,500 in compensatory damages, trebled under

RICO. It also awarded $5,500,000 in punitive damage because

it found respondents acted outrageously.

Respondents moved for judgment n.o.v. on all claims. On

October 22, 1987, the District Court granted respondents’ motion

for the RICO claims for it concluded petitioners failed to satisfy

RICO’s ‘‘continuity’’ requirement. It also set aside the

compensatory damage award as excessive. The court suggested

remittitur, but when defendants made no offer to settle, the Court

ordered a new trial on damages only. On the basis of the

Barticheck’ decision of the Third Circuit, petitioners moved for

a reconsideration of the District Court’s orders. On May 17, 1988,

the court reinstated the RICO verdicts, vacating in part its October

22, 1987 grant of judgment n.o.v. On June 9, 1988, it decided

not to submit the issue of punitive damages to a second jury.

The court granted the petitioners delay damages (interest).

However, on November 20, 1989, before the start of the

second trial.* respondents, on the basis of this Court’s decision

in H.J. Inc. moved to vacate the May 17, 1988, order that vacated

the judgment n.o.v. of October 22, 1987 and reinstated the RICO

claim. On March 1, 1990, five days before the scheduled re-trial

on damages the court granted respondents’ motion to vacate the

May 17, 1988 order, reinstated the October 22, 1987 grant of

judgment n.o.v. on the RICO claim, and ordered retrial of the

punitive damages issue without any order vacating the original

punitive damage verdict.

In the second trial on damages, the jury awarded petitioners

$4,272,677 in compensatory damages and $674,000 in punitive

damages. The respondents moved for judgment n.o.v., new trial,

and reargument. The District Court denied these motions. The

7. Barticheck v. Fidelity Union Bank/First National Bank, 832 F.2d 36

(3d Cir. 1987).

8. By November 20, 1989, the Honorable D. Brooks Smith had been

assigned to this case. Judge Teitelbaum had retired.

judge at the second trial reversed the first judge and denied

petitioners delay damages (interest). Both parties filed timely

appeals.

On September 20, 1991 the Third Circuit per Sloviter, C.J.,

Nygard and Katz rendered their initial decision in this matter.

The Third Circuit court reinstated the first damage award, and

concluded that the first punitive damage award was adequately

supported by the record. The Third Circuit concluded that

petitioners were not entitled to either prejudgment interest or delay

damages and that the District Court properly granted judgment

n.o.v. on the RICO claim since the continuity requirement was

not satisfied. Furthermore, the Third Circuit concluded that the

District Court properly granted partial summary judgment, holding

that as a mater of law’ Monongahela had eminent domain powers.

Finally the Third Circuit concluded that the District Court properly

instructed the jury on the law of misrepresentation, the plaintiffs

could have justifiably relied on the statements made by the Upshur

agents and that the District Court erred by granting judgment

n.o.v. on the legal malpractice claim and the District Court’s

remark did not deprive respondents of a fair trial.

. REASONS FOR GRANTING THE WRIT

JUST COMPENSATION

The holding of the Third Circuit denying petitioners delay

damages is an unconstitutional denial of just compensation since

it denies a property owner interest on property acquired pursuant

to a condemnation scheme and therefore conflicts with this Court’s

decision in Seaboard.’ In Seaboard this Court determined that

9. Seaboard Air Line Railway Company, et al. v. United States, 261 U.S.

299, 43 S. Ct. 354, 67 L. Ed. 664 (1924).

just compensation is the full and perfect equivalent of the property

taken and must put the property owner in the same financial

position as he would have been if his property had not been taken.

Furthermore this Court stated that interest is necessary to have

just compensation. In addition to being contrary to well established

authority, with this case as the precedent on the issue of delay

damages, fraud pays since lawful condemnation requires payment

of delay damages but fraudulent takings using threats of

condemnation do not. Such a precedent encourages fraud, threats

and extortion and discourages fraudulent defendants from

complying with the statutory procedure for eminent domain

takings.

Il.

RICO

In order to establish a RICO cause of action, four elements

must be proven. These elements are (1) conduct (2) of an enterprise

(3) through a pattern (4) of racketeering activity. Sedima, S.P.L.R.

v. Imrex Co., 473 U.S. 479, 496 (1985). Of these elements, at

issue in the case at bar is whether petitioners proved at trial that

the respondents had engaged in a ‘“‘pattern of racketeering

activity.”’ Under RICO, a pattern ‘‘requires at least two acts of

racketeering activity one of wbich occurred after the affective date

of this chapter and the last of which occurred within 10 years

after the commission of a prior act of racketeering

activity... ."’ 18 U.S.C. § 1951(5). In A.J. Inc., this Court stated:

A “‘pattern’”’ is an arrangement or order of things

or activity [citation], and the mere fact that there

are a number of predicates is no guarantee that

they fall into any arrangement or order. It is not

the number of predicates but the relationship they

bear to each other or to some external organizing

principle that renders them ‘‘ordered’’ or

‘*arranged’’.

109 S. Ct. at 2900.

In conclusion this Court stated in HJ. Inc.:

The limits of the relationship and continuity

concepts that combine to define a RICO pattern,

and the per se methods by which relatedness and

continuity or its threat may be proved, cannot be

fixed in advance with such clarity that it will always

be apparent whether in a particular case a ‘‘pattern

of racketeering activity exists.”

109 S. Ct. at 2902.

This Court in H.J/. Inc. stated that ‘‘acts extending over a

few weeks or months and threatening no future criminal conduct

do not satisfy this requirement,’’ and referred to Congress’ concern

with long-term criminal conduct. 109 S. Ct. at 2902. This Court

also made clear that where continuity cannot be established in

this way, liability will depend upon ‘‘whether the ¢hreat of

continuity is demonstrated.’’ /bid. (Emphasis by the Court.)

However, the Circuit Courts are developing a pattern analysis

under RICO that uses rigid time limits. Moreover, they do not

agree on the different times to be used to determine what

constitutes a substantial period. Courts have created four

approaches in determining what amounts to a showing of a pattern

for RICO purposes. These are the ‘‘totality of the circumstances’’,

the ‘‘goal and/or inferred threat’’, the ‘‘factually oriented analysis

and the draconian theory lacking flexibility.” United States v.

Busacca, 739 F. Supp. 370 (N.D. Ohio 1991) ‘‘totality of the

circumstances’’; Chase Manhattan Bank N.A. v. Malatesta, CCH

RICO Business Disputes Guide ¢ 7510 (S.D.N.Y. 1990) ‘‘goal

and/or inferred threat’‘; Dyna Best Inc. v. Yao, 760 F. Supp.

704 (N.D. Ill. 1991) ‘‘factually oriented analysis’’; and Hughes

v. Consol Pennsylvania Coal Co., 945 F.2d 594 (3rd Cir. 1991)

‘“‘draconian theory lacking flexibility’’. This conflict has led to

an intolerable situation imposed upon, litigants and courts

interpreting what constitutes a ‘‘substantial period”’ for purposes

of proving a pattern. None of the opinions of the Circuit or District

Courts can be reconciled. Although this Court in HJ. Inc. openly

welcomed the courts to define pattern we are sure it did not invite

chaos. In the case at bar, under existing precedent, petitioners

would have had their RICO verdict upheld in other Circuit and

Disirict Courts. The Third Circuit now allows one year of RICO

violations without penalty.

A. The District Court and the Third Circuit Abused Their

Discretion in Unconstitutionally Denying Just Compensation to

the Petitioners.

Private property shall not be taken for public use without

just compensation. U.S. Const., Amend. V. Just compensation

is provided for by the Constitution and its ascertainment is a

judicial function. In Seaboard this Court held that interest at a

proper rate is necessary in order for a property owner not to suffer

loss and to have just compensation to which he is entitled. 261

U.S. at 307. Petitioners had their property taken under the threat

of eminent domain by a party the lower court and Third Circuit

held had the power of eminent domain. Given this ruling, the

consequence of respondents’ proven fraud enables respondents

to acquire petitioners’ land without paying just compensation as

required by the Fifth Amendment, and as required under the

Constitution of the Commonwealth of Pennsylvania. Pa. Const.,

Art. 1, § 10 and Art. 10, § 4.

The jury verdict awarding compensatory damages of

$5,360,500 divided among nine properties taken under the threat

of eminent domain was the market value of the property taken.

This award did not include delay damages. The Honorable Hubert

I. Teitelbaum ruled delay damages would be payable (106a). The

Honorable D. Brooks Smith reversed Judge Teitelbaum (76a-77a).

Under Pennsylvania and United States constitutional protection,

just compensation must include interest, i.e., delay damages in

Pennsylvania. Cf. Hughes v. Com. Dept. of Trans., 514 Pa. 300,

623 A.2d 747 (1987) wherein the Pennsylvania Supreme Court

ordered delay interest at the prevailing commercial rate.

As just compensation under both federal and Pennsylvania

state constitutional standards requires interest from the date of

taking, petitioners are entitled to the same. See United States v.

Blankenship, 543 F.2d 1272 at 1274 (9th Cir. 1976). The refusal

to award such interest denies petitioners the basic constitutional

protection against a state-authorized involuntary taking without

just compensation.

Respondents now are rewarded for their fraudulent conduct.

They have acquired the right-of-way quickly without the delay

of eminent domain proceedings. They have saved money and they

do not have to pay delay interest as is required by eminent domain

law.

Petitioners, the victims of this fraudulent conduct, are

awarded less than they would receive in an eminent domain

proceeding as the lower courts, unconstitutionally, have deprived

them of delay interest. Surely this is a precedent instructing

malefactors to ignore the law. The Court must correct this

injustice.

B. The Circuits Are Creating Different Rigid Time Periods in

Their Interpretations of What Period of Time Amounts to a

Pattern Which Is Contrary to H.J. Inc., Flexible Approach and

Petitioners’ Case Would Have Been Decided Differently by the

Second, Sixth and Seventh Circuits.

In H.J. Inc, this Supreme Court commenced its discussion

of the concept of ‘‘pattern’’ of conduct by stating:

[W]e must ‘‘start with the assumption that the

legislative purpose is expressed by the ordinary

meaning of the words used.”’ [Citation.} In normal

usage, the word ‘‘pattern’’ here would be taken

to require more than just a multiplicity of

racketeering predicates. A ‘‘pattern’’ is an

‘“‘arrangement or order of things or activity,’’

[citation], and the mere fact that there are a

number of predicates is no guarantee that they fall

into any arrangement or order. It is not the number

of predicates but the relationship that they bear

to each other or to some external organizing

principle that renders them ‘‘ordered’’ or

‘*arranged.”’

109 S. Ct. at 2900.

This Court then noted that both the text of the RICO statute

and the legislative history reflect that Congress meant to take a

‘*flexible’’ attitude toward whether a pattern of conduct exists

in a particular situation.

This Court continued its discussion of this concept by stating

that, ‘‘Whether the predicates proved establish a threat of

continued racketeering activity depends on the specific facts of

the case,’’ and by discussing a series of ‘‘examples of how this

element might be satisfied.’’ Jd. at 2902.

In conclusion, this Court stated in A.J. Inc.:

The limits of the relationship and continuity

concepts that combine to define a RICO pattern,

and the precise methods by which relatedness and

continuity or its threat may be proved, cannot be

fixed in advance with such clarity that it will always

be apparent whether in a particular case a ‘‘pattern

of racketeering activity’’ exists.

From these references to a ‘‘flexible’’ approach to the

determination of whether a ‘‘pattern’’ exists, to an ‘‘arrangement

or order’’ to the activities, to the need to look to ‘‘the specific

facts of the case,’’ and to examples discussed as being illustrative

of how the element of pattern ‘‘might’’ be satisfied, it should

be apparent that the issue of whether this element of a RICO

claim has been satisfied should be for the jury to determine in

any case where a reasonable jury could find a ‘‘pattern’’ to exist

from evidence which may be brought forth at trial.

Although this Court in H.J. Inc. openly welcomed the Circuit

Courts to define pattern, this Court also suggested a flexible

approach to the determination of whether a ‘‘pattern’’ exists. This

Court suggested the need to look to the specific facts of the case

to determine if there exists an ‘‘arrangement or order’’ to the

activities. The courts are disregarding the context in which the

examples were discussed. Some of the approaches do look at the

facts to determine if there exists an ‘‘arrangement or order.”’’

Busacca, two and one half months, shows a pattern under the

theory of ‘‘totality of the circumstances’’; Chase Manhattan Bank,

thirty days, shows a pattern under the theory of ‘‘goal and/or

inferred threat’’; Dyna Best, one year, shows a pattern under the

“*factually oriented’’ analysis. In Hughes, one year was not a

pattern under a draconian theory lacking flexibility. In the case

at bar under existing precedent, petitioners would have had their

RICO verdict upheld in other Circuit and District Courts. The

Third Circuit now allows one year of RICO violations without

penalty.

The Third Circuit in the case at bar did not analyze whether

any ‘‘order’’ or ‘‘arrangement‘ of activity had been shown from

the manner in which the defendants dealt with at least 52 separate

landowners in the acquisition of more than 60 parcels of land

for use in building a railroad spur to mining property being

developed by the defandants. Rather, the court focused upon the

fact that the ‘‘defendants had but one area to acquire,”’ and after

acquiring that property ‘‘they posed no future threat to plaintiffs

or society,’’ and upon a draconian legal conclusion held that

‘*twelve months is not a substantial period of time’’ for RICO

purposes (50a). 945 F.2d at 610-611. The Third Circuit stated:

In short, defendants worked a single-scheme,

single-victim (albeit a class of victims) operation

that lasted one year at most.

(50a).

This Supreme Court in A.J. Inc. had, in fact, referred to

‘‘continuity’’ as a ‘‘temporal’’ concept, discussed ‘‘predicates

extending over a substantial period of time,’’ stated that ‘‘acts

extending over a few weeks or months and threatening no future

criminal conduct do not satisfy this requirement,’’ and referred

to Congress’ concern with ‘‘long term crimina] conduct.’’ 109

S. Ct. at 2902. However, this Court also made clear that where

continuity cannot be established in this way, liability will depend

upon ‘‘whether the threat of continuity is demonstrated.’’ /bid.

(Emphasis theirs.)

An appropriate test for whether the threat of continuity is

demonstrated was stated in Sun Savings and Loan Association

v. Dierdorff, 825 F.2d 187, 194, n.5. (9th Cir. 1987), the year

petitioners tried this case and prior to H.J. Inc.:

The fact that the last of a series of predicate acts

may have completed the criminal scheme does not

necessarily preclude a finding of continuity. As

long as a threat of continuing activity exists at some

point during the .racketeering activity, the

continuity requirement is satisfied.

After the fourth, fifth or sixth landowner had been

approached through the fraudulent conduct by which the

respondents’ sought to obtain parcels of land at significantly

depressed prices, some ‘‘order’’ or ‘‘arrangement’’ to respondents’

conduct certainly existed. Moreover, at that point a threat certainly

existed that respondents would similarly seek to defraud the

balance of the landowners who owned parcels needed by

respondents.

In focusing on the completion of the property acquisitions

within one year, the Third Circuit disregarded the evidence of

the five-year agreement among certain defendants-respondents who

were financing the project. These respondents required a provision

in the agreement, among them that funds totaling 12.5 million

a year they were to contribute to the venture would be withheld

as each year passed without completion of these acquisitions, and

that they could ‘‘withdraw entirely from the venture’’ ‘‘[i]f the

rights of way were not purchased after five-years’’ (41a).

In fact, the short time involved in this case may be more

of an attestation to the egregious manner in which respondents

engaged in their fraudulent conduct causing sellers to capitulate

faster than anticipated, and allowing the soliciting respondents

to go on to the next landowner sooner — than to any limitation

of the threat of continued unlawful activities.

Furthermore the Third Circuit ignored the evidence that

Consol plans to build a second 6-mile track line to the Nineveh

Coal Reserve. The jury could infer that but for the petitioners

filing this lawsuit these rights-of-way would have been acquired

by the same fraudulent means of doing business. In the future,

with the Hughes case as the law, these rights-of-way can be

acquired in the same fraudulent way within a one-year time period

without any RICO violations.

Finally, the false premise relied upon by the Third Circuit

in characterizing the conduct as a ‘‘single-victim (albeit class of

victims) operation’’ involves a classic Catch-22, which disregards

the fact that no familial or business relationship existed among

the 12 selling landowners. This type of reasoning, when applied

to distinct and separate victims, could lead to the incongruous

conclusion that the more closely related the type of victims are

to one another — satisfying the relatedness test — the more likely

they would be deemed a ‘‘single-victim,’’ thereby thwarting

satisfaction of the continuity test. This result is also in direct

conflict with this Court’s ‘‘flexible’’ approach to be applied to

the concept of ‘‘pattern’’ of unlawful conduct.

In an earlier opinion the Third Circuit held that continuity

existed where the racketeering activity lasted only 14 months, and

other potential transactions raised the issue of whether fraud was

a regular way of defendants doing business. See Swistock v. Jones,

884 F.2d 755, 769 (1989). There the court stated:

Although the Court in A.J. Inc., did not explicitly

hold that the existence of a RICO pattern was a

jury question, the Court held that the district court

had improperly dismissed plaintiffs’ RICO claim

because ‘‘a threat of continuity of racketeering

activity might be established at trial by showing

that the alleged bribes were a regular way of

conducting Northwestern Bell’s ongoing business.’’

109 S.Ct. at 2906 (emphasis added).

884 F.2d at 758.

As important as time may be in considering whether there

is any ‘‘order’’ or ‘‘arrangement”’ to the conduct of the defendants

such that a ‘‘pattern’’ of conduct will exist, so long as the pleadings

show racketeering activity over some period of time and potential

future wrongdoing at any time during the unlawful conduct, a

plaintiff should have the opportunity to develop that part of the

case and to present evidence to a properly instructed jury for

decision. It is not for the Circuit Courts to rigidly interpret what

period of time amounts to a pattern. Pattern under the RICO

statute is a jury question and the 30-page verdict slip consisting

of $39 interrogatory questions answered correctly should stand. '°

C. Did the District Judge and the Third Circuit Have the

Constitutional Power to Grant Judgment N.0.V After a Jury Made

Specific Findings of RICO Violations and Creates a Loophole

for Future Violators.

When a trial court reverses an issue after it was properly

submitted to the jury, it may deny the non-moving party of his

Seventh Amendment rights. Lowenstein v. Pepsi-Cola Bottling

Co., 536 F.2d 9, 11 (3d Cir.), cert. denied, 429 U.S. ___, 975

S. Ct. 396, 60 L. Ed. 2d 334 (1976).

In reaching its decision to disregard the jury’s finding of

10. Cf., Securities & RICO Update, January 1992, Michael A. Bertz,

Esquire.

culpability and finding of a pattern under the RICO Statute the

Court stated:

As to open-ended scheme, we find no evidence that

defendants used fraud as a regular way of doing

business or formed an on going criminal

association... . There were no ‘‘potential’’ areas

of interest. Once defendants obtained the property,

they posed no future threat to plaintiffs or society.

The defendants’ fraud was not akin to the type

where hoodlums sell ‘‘insurance’’ to store keepers

to cover them against breakage of their windows,

telling their victims they would return each month

to collect their ‘‘premiums’’. H.J. Inc., 492 U.S.

at 242.

Theirs was akin to a one time racket to obtain

specific bounty. We find no continuity under an

open-ended scheme.

Hughes, et al. v. Consolidation Coal Co. (emphasis added).

These conclusions by the Third Circuit mischaracterize the

evidence supporting the jury’s findings on continuity and future

threats of RICO violations. The evidence was clear that these

fraudulent methods (lies, intimidation and coercion) towards the

approximately 52 landowners along the route of the Manor reserve

is the preferred way of doing business by the defendants because

these methods work quickly and cheaply. Furthermore there have

been actual steps taken to acquire the property to the Nineveh

reserve by Ewing Pollock and the defendants presented no evidence

that the same pattern of fraud was not used, therefore the jury

may infer that the same methods were and will be used. Given

the evidence of the same objectives to be accomplished in the

future, /.e., the 6-mile right-of-way to the Nineveh reserve which

is the ‘‘potential area of interest’’ the jury clearly decided this

was an open-ended scheme.

Moreover, during the first trial the jury was taken by bus

to Greene County for a view of the entire length of the railroad

and plaintiffs’ properties. This was done to permit the jury to

consider the view with what they would hear on the witness stand

and to understand the exhibits introduced into evidence. During

that view the jury physically saw the ‘‘future threat’’ of fraudulent

conduct at the junction at Sycamore where there lies a 200-foot

unfinished railroad line pointing toward the Nineveh Reserve. This

second railroad line has yet to be built. However, as early as the

meeting of June 10, 1981, as reflected in the notes of that meeting

(TR2, Ex. 24), these conspirators and party defendants plan to

build a second railroad line after 1983 to what is called the Nineveh

Reserve. For this right-of-way the defendants only intend to pay

a fixed amount for the properties they will have to acquire to

finish this second railroad line (TRI, Ex. 126; TR1, Ex. 137).

Clearly a jury could infer that this is a future threat.

Testimony was elicited from Mr. Kaush of the German

defendants, that the same tactic used by Consol in this instance

was used by Consol to obtain right-of-way property for a Utah

mine (TR1, 1364). Defendant Ewing Pollock testified that the

defendants are going to construct the second railroad line, the

6-mile line to the other coal reserve at Nineveh (TR, 892-893).

Finally, the charge given to the jury, which was as follows:

If you find that the conduct of defendants was

Outrageous, you may award punitive damages as

well as compensatory damages in order to punish

said defendants for their conduct and fo deter the

defendants and others from the commission of like

acts

(TR1, 2615) (emphasis added), resulted in a 6.5 million dollar

punitive damage award. The jury clearly believed that there was

and remains that threat of continued criminal activity as described

by this Court in H.J. Inc., 109 S. Ct. 2893 (1989). The facts in

this case are so strong concerning the issue of pattern and the

threat of continued criminal activity that if this case is the law

it can be used by any defendant, criminal or civil, to avoid RICO

violations so long as they structure their illegal and criminal

activities to a short time to obtain a specific bounty even though

future activity is threatened. What the Third Circuit held was

12 months or | year of RICO activity are for free whether it be

a one-time contract to commit murder, or import drugs, does

not matter just so the contracts are structured properly and

completed within one year even though the threat of repetition

by the same defendants exists.

This case also, takes the question of pattern away from the

jury after the jury verdict is rendered. Clearly this was not the

intent of this Court in H.J. /nc. nor was it the intent of Congress

when the RICO statute was enacted.

In this case, where there are numerous facts establishing

continuity, the petitioners have been denied their Seventh

Amendment rights. The Third Circuit failed to address these

numerous facts pointed out in the argument above indicating future

conduct. The Third Circuit’s timeframe, extending from the first

petitioner’s acquisition to the last property acquired, ignores facts

of earlier planning, meetings, agreements, a five-year timeframe

in agreement and predicate acts of retaliation and reward as late

as 1984 providing a four-year timeframe of activity. Likewise,

the future acquisition of the Nineveh Spur was shown. It is an

abuse of discretion for the Third Circuit to overrule the jury’s

analysis of these facts. There is evidence of an extensive timeframe

for the bad conduct and evidence of future bad acts being likely.

Continuity as required by RICO has been established. The jury

in the first trial was correct.

CONCLUSION

Resolution of the foregoing problems is needed by this Court.

The instant case is an idea! case to effectuate that resolution. This,

unlike many RICO actions, is not a simple variety fraud case,

rather the evidence at trail showed a history of overwhelming and

unchecked corporate tyranny and oppression. This Court must

set forth a rule of law to both the law on just compensation and

the RICO statute. Only by so doing will the law of just

compensation be restored and the current confusion of law in

RICO cases be ended.

Respectfully submitted,

LOUIS M. TARASI, JR.

TARASI & JOHNSON, P.C.

Attorneys for Petitioners

APPENDIX A — AMENDED OPINION AND ORDER OF

THE UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT FILED DECEMBER 20, 1991

Filed December 20, 1991

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 90-3466

JAMES E. HUGHES and LINDA L. HUGHES,

Appellant

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, PULLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL CO.;

CONSOL-LAND DEVELOPMENT CO.

MARIA THERESIA BERGBAUGESELLSCHAFT

MBH &

RHEINISCHE BRAUNKOHLENWERKE

No. 90-3467

DOROTHY LOUGHMAN,

Appendix A

Appellant

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT.

AND MARIA THERESE

VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

No. 90-3468

PAUL H. KENT and MABEL KENT,

Appellants

CONSOL-PENNSYLVANIA COAL COMPANY, &

corporation;

RHEIN BRAUN U.S., a corporation,

MONONGAHELA RAILWAY COMPANY, a

Appendix A

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

No. 90-3469

JAMES C. McINTYRE and GLENNA MCINTYRE,

Appellants

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

Appendix A

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAPFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

No. 90-3470

LARRY LEVINE, DAN LEVINE, MORRIS LEVINE,

EDWARD LEVINE, individuals; and

MORRIS LEVINE ENTERPRISES, INC., a

corporation;

and LEVINE IRON AND METAL, INC., a

corporation,

Appellants

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

Appendix A

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

HEINISCHE BRAUNKOHLENWERKE

No. 90-3471

DOROTHY LOUGHMAN

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;,

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Consol-Pennsylvania Coal Company,

Consolidated Coal Co.,

Consol-Land Development Company, and

The Monongahela Railway Company,

Appendix A

Appellants

No. 90-3472

DOROTHY LOUGHMAN

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugesellschaft MBH, and

Rheinische Braunkohlenwerke,

Appellants

Appendix A

No. 91-3473

DOROTHY LOUGHMAN

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual;

MIKE WILSON, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

David Boggs, an individual,

The Upshur Agency, Inc.,

William Reese, an individual,

Mike Wilson, an individual,

Appellants

Appendix A

No. 90-3474

JOHN W. YESENOSKY, JR. and LINDA M.

YESENOSKY

7.”

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Consol-Pennsylvania Coal Company,

Consolidated Coal Company,

Consol-Land Development Company, and the

Monongahela Railway Company,

Appellants

Appendix A

No. 90-3475

JOHN W. YESENOSKY, JR. and LINDA M.

YESENOSKY

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation,

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC..;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugesellschaft, MBH, and

Rheinische Braunkohlenwerke,

Appellants

10a

Appendix A

No. 90-3476

PAUL H. KENT and MABEL KENT

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Consol-Pennsylvania Coal Company, a

corporation,

Monongahela Railway Company, a corporation,

Consolidated Coal Company,

Consol-Land Development Company,

Appellants

lla

Appendix A

No. 90-3477

PAUL H. KENT and MABEL KENT

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugeselischaft MBH,

Rheinische Braunkohlenwerke,

Appellants

No. 90-3478

JAMES C. McINTYRE and GLENNA MCcINTYRE

12a

Appendix A

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Consol-Pennsylvania Coal Company, a

corporation,

Monongahela Railway Company, a corporation,

Consolidated Coal Company,

Consol-Land Development Company,

Appellants

No. 90-3479

JAMES C. McINTYRE and GLENNA McINTYRE

13a

Appendix A

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugesellschaft MBH,

Rheinische Braunkohlenwerke,

Appellants

No. 90-3480

LARRY LEVINE; DAN LEVINE; MORRIS LEVINE;

EDWARD LEVINE; MORRIS LEVINE

ENTERPRISES; LEVINE IRON & METAL

l4a

Appendix A

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Consol-Pennsylvania Coal Company, a

corporation,

Monongahela Railway Company,

Consolidated Coal Company,

Consol-Land Development Company,

Appellants

No. 90-3481

LARRY LEVINE; DAN LEVINE; MORRIS

LEVINE; EDWARD LEVINE; MORRIS LEVINE

ENTERPRISES; LEVINE IRON & METAL

]

1Sa

Appendix A

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugesellschaft MBH,

Rheinische Braunkohlenwerke,

Appellants

No. 90-3482

JAMES HUGHES and LINDA HUGHES

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual;

DAVID BOGGS, an individual;

l6a

Appendix A

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.::

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

MARIA THERESIA BERGBAUGESELLSCHAPFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Consol-Pennsylvania Coal Company, a

corporation,

Monongahela Railway Company,

Consolidated Coal Company,

Consol-Land Development Company,

Appellants

No. 90-3483

JAMES HUGHES and LINDA HUGHES

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

co-poration;

WILLIAM REESE, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

17a

Appendix A

CONSOL-LAND DEVELOPMENT COMPANY;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugeselischaft MBH,

Rheinische Braunkohlenwerke,

Appellants

No. 90-3484

THOMAS J. ALLEN

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

18a

Appendix A

Consol-Pennsylvania Coal Company, a

corporation,

Monongahela Railway Company,

Consolidated Coal Company,

Consol-Land Development Company,

Appellants

No. 90-3485

THOMAS J. ALLEN

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

- THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

19a

Appendix A

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugesellschaft MBH,

Rheinische Braunkohlenwerke,

Appellants

No. 90-3494

DOROTHY LOUGHMAN

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Ewing Pollock, and Pollock, Pollock and Thomas,

Appellants

20a

Appendix A

No. 90-3495

JOHN W. YESENOSKY, JR. and LINDA M.

YESENOSKY,

Appellants

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual:

JAMES LEACH, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

2la

Appendix A

No. 90-3496

JOHN W. YESENOSKY, JR. and LINDA M.

YESENOSKY

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Ewing Pollock, and Pollock, Pollock and

Thomas,

Appellants

22a

Appendix A

No. 90-3497

JOHN W. YESENOSKY, JR. and LINDA M.

YESENOSKY

we:

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual:

WILLIAM REESE, an individual:

JAMES LEACH, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Mike Wilson, William Reese, David Boggs,

The Upshur Agency, Inc.,

Appellants

23a

Appendix A

No. 90-3498

PAUL H. KENT and MABEL KENT

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Ewing Pollock, and Pollock, Pollock and Thomas,

Appellants

No. 90-3499

PAUL H. KENT and MABEL KENT

24a

Appendix A

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation:

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

WILLIAM REESE, an individual:

JAMES LEACH, an individual:

DAVID BOGGS. an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Mike Wilson, William” Reese, David Boggs,

The Upshur Agency, Inc.,

Appellants

No. 90-3500

JAMES C. McINTYRE and GLENNA McINTYRE

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual:

25a

Appendix A

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Ewing Pollock, and Pollock, Pollock and Thomas,

Appellants

No. 90-3501

JAMES C. McINTYRE and GLENNA MCcINTYRE

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

WILLIAM REESE, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

26a

Appendix A

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Mike Wilson, William Reese, David Boggs,

The Upshur Agency, Inc.,

Appellants

No. 90-3502

LARRY LEVINE; DAN LEVINE; MORRIS LEVINE;

EDWARD LEVINE; MORRIS LEVINE

ENTERPRISES; LEVINE IRON & METAL

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

27a

Appendix A

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Ewing Pollock, and Pollock, Pollock and

Thomas,

Appellants

No. 90-3503

LARRY LEVINE; DAN LEVINE; MORRIS LEVINE;

EDWARD LEVINE; MORRIS LEVINE

ENTERPRISES; LEVINE IRON & METAL

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

WILLIAM REESE, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC-.:;

CONSOLIDATED COAL COMPANY;

28a

Appendix A

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Mike Wilson, William Reese, David Boggs,

The Upshur Agency, Inc.,

Appellants

No. 90-3504

JAMES HUGHES and LINDA HUGHES

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

WILLIAM REESE, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

MARIA THERESIA BERGBAUGESELLSCHAFT,.

MBH &

RHEINISCHE BRAUNKOHLENWERKE

29a

Appendix A

Ewing Pollock, and Pollock, Pollock and Thomas,

Appellants

No. 90-3505

JAMES HUGHES and LINDA HUGHES

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

WILLIAM REESE, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Mike Wilson, William Reese, David Boggs,

The Upshur Agency, Inc.,

Appellants

30a

Appendix A

No. 90-3506

MARK E. HEADLEE and CHARLOTTE B.

HEADLEE,

Appellants

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation; ;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

— ss

3la

Appendix A

No. 90-3507

MARK EF. HEADLEE and CHARLOTTE B.

HEADLEE

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation:

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY:

CONSOL-IFAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Consol-Pennsylvania Coal Company, a

corporation,

Monengahela Railway Company,

Consolidated Coal Company,

Consol-Land Development Company,

Appellants

32a

Appendix A

No. 90-3508

MARK E. HEADLEE and CHARLOTTE B.

HEADLEE

Vv.

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Rhein Braun U.S., a corporation,

Maria Theresia Bergbaugesellschaft MBH.

Rheinische Braunkohlenwerke,

Appellants

33a

Appendix A

No. 90-3509

MARK E. HEADLEE and CHARLOTTE B.

HEADLEE

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Ewing Pollock, and Pollock, Pollock and Thomas,

Appellants

34a

Appendix A

No. 90-3510

MARK E. HEADLEE and CHARLOTTE B.

HEADLEE

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual:

WILLIAM REESE, an individual:

JAMES LEACH, an individual:

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.:

CONSOLIDATED COAL COMPANY:

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Mike Wilson, William Reese, David Boggs,

The Upshur Agency, Inc.,

Appellants

35a

Appendix A

No. 90-3511

THOMAS J. ALLEN, Esquire, Personal

Representative of the Estate of JOHN T.

THROCKMORTON,

Appellants

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

36a

Appendix A

No. 90-3512

THOMAS J. ALLEN, Esquire, Personal

Representative of the Estate of JOHN T.

THROCKMORTON

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

JAMES LEACH, an individual;

DAVID BOGGS, an individual:

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC-.:;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY:

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;:

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Ewing Pollock, and Pollock, Pollock and

Thomas,

Appellants

37a

Appendix A

No. 90-3513

ee Lo ae

THOMAS J. ALLEN, Esquire, Personal

Representative of the Estate of JOHN T.

THROCKMORTON

CONSOL-PENNSYLVANIA COAL COMPANY, a

corporation;

RHEIN BRAUN U.S., a corporation;

MONONGAHELA RAILWAY COMPANY, a

corporation;

MIKE WILSON, an individual;

WILLIAM REESE, an individual;

JAMES LEACH, an individual;

DAVID BOGGS, an individual;

EWING POLLOCK, an individual, and

the law firm of POLLOCK, POLLOCK AND

THOMAS;

THE UPSHUR AGENCY, INC.;

CONSOLIDATED COAL COMPANY;

CONSOL-LAND DEVELOPMENT COMPANY;

RHEINBRAUN VERKAUFSGESELLSCHAFT, MBLT

and

MARIA THERESE VERKAUFSGESELLSCHAFT;

MARIA THERESIA BERGBAUGESELLSCHAFT,

MBH &

RHEINISCHE BRAUNKOHLENWERKE

Mike Wilson, William Reese, David Boggs,

The Upshur Agency, Inc.,

Appellants

38a

Appendix A

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE WESTERN DISTRICT

OF PENNSYLVANIA

(D.C. Civil Action Nos. 83-00921, 83-01674,

83-01675, 83-01676, 83-01677, 83-01678,

83-01679, 83-01754)

Argued January 28, 1991

Before: SLOVITER, Chief Judge; NYGAARD,

Circuit Judge and KATZ, District Judge*

(Opinion Filed December 20, 1991)

LOUIS M. TARASI, JR., ESQUIRE (argued)

JOSEPH J. HINCHLIFFE, ESQUIRE

Tarasi & Johnson

510 Third Avenue

Pittsburgh, PA 15219

DAVID C. HOOK, ESQUIRE

Hook & Hook

P.O. Box 792

Waynesburg, PA 15370

Attorneys for Appellants in

Nos. 90-3466, 90-3467, 90-3468,

90-3469, 90-3470, 90-3495,

90-3506, 90-3511

JOSEPH A. KATARINCIC, ESQUIRE (argued)

Katarincic & Salmon

625 Liberty Avenue

2600 CNG Tower

* Honorable Marvin Katz, United States District Judge for

the Eastern District of Pennsylvania, sitting by designation.

39a

Appendix A

Pittsburgh, PA 15222

Attorney for Appellants in

Nos. 90-3471, 90-3474, 90-3476

90-3478, 90-3480, 90-3482,

90-3484, 90-3507

JOSEPH D. BECKER, ESQUIRE (argued)

Becker, Glynn & Melamed

299 Park Avenue

New York, NY 10171

Attorney for Appellants in

Nos. 90-3472, 90-3475, 90-3477

90-3479, 90-3481, 90-3483

90-3485, 90-3508 .

JAMES F. MANLEY, ESQUIRE (argued)

Burns, Manley & Little

2922 Gulf Tower

Pittsburgh, PA 15219

Attorney for Appellants in

Nos. 90-3473, 90-3497, 90-3499

90-3501, 90-3503, 90-3505,

90-3510, 90-3513

KATHRYN L.SIMPSON, ESQUIRE (argued)

VINCENT J. GROGAN, ESQUIRE

Grogan, Graffam, McGinley

& Lucchino

Three Gateway Center

22nd Floor

Pittsburgh, PA 15222

Attorney for Appellants in

Nos. 90-3494, 90-3496, 90-3498

90-3500, 90-3502, 90-3504,

40a

Appendix A

90-3509, 90-3512

OPINION OF THE COURT

NYGAARD, Circuit Judge.

These consolidated appeals arise from a series

of complaints filed by plaintiffs after Monongahela

Railway Company acquired their properties and

rights-of-way in trust for Consolidated Coal

Company, for it to construct and operate a 14.5

mile track from a coal.mine to Monongahela’s main

line. Plaintiffs allege that defendants, Monongahela

and Consolidated Coal, among others, fraudulently

misrepresented facts to obtain favorable prices.

They sought lost profits on theories of civil

conspiracy, common law fraud, and violations of

the Racketeer Influenced and Corrupt

Organizaticns Act (RICO), 18 U.S.C. § 1961 et seq.

I. FACTS AND PROCEDURE

Consolidated Coal Company (Consol) acquired

the Nineveh and Manor coal reserves located in

Greene County, Pennsylvania. To exploit these

reserves, it meeded railroad rights-of-way. In

December 1980, Consol signed a letter of intent

with Rheinische Braunkohlenwerke A.G. (RBW) to

form a joint venture to develop these mining

reserves. On June 30, 1981, their affiliates,

Consol-Pennsylvania Coal Company (Consol-PA)

and Rheinbraun U.S. Corporation, signed an

“Operating Joint Venture Agreement”. On October

29, 1981, Consol and Maria_ Theresia

Bergbaugesellshaft (MTB), a RBW _ subsidiary,

formed Conrhein Coal Company, a partnership.

4la

Appendix A

Conrhein subleased the reserves to the joint

venture of Consol-PA and Rheinbraun U.S. These

affiliates held the reserves as tenants in common.

The coal reserves are located about 14.5 miles

from Monongahela Railroad Company's

(Monongahela) main line. Consol needed a spur

railroad to transport coal from the reserves. On

September 30, 1981, Consol and Monongahela

signed a “Property Acquisition Agreement”. They

agreed that Monongahela would use the railroad’s

eminent domain power to acquire more than fifty

parcels of land owned by plaintiffs and other

landowners in the “Areas of Interest”. Monongahela

would hold any land it acquired in trust for

Consol. In the same agreement, Monongahela and

Consol contracted with Upshur Agency, a real

estate broker. Upshur agreed to negotiate with

plaintiffs for the needed rights-of-way.

The Rheinbraun corporations were concerned

that Consol would be unable to purchase the

needed rights-of-way to transport the coal to the

various markets. Consequently, addenda were

added to their agreements. They provide that

Rheinbraun could withhold $12.5 million of its $75

million total investment in the venture for each

year that passed before Consol obtained the

rights-of-way. If the rights-of-way were not

purchased after five years, Rheinbraun could

withdraw entirely from the venture.

Time was crucial. The scheme to defraud

plaintiffs unfolded as follows. Upshur agents

acquired the properties from plaintiffs “in the

mame of ‘Monongahela Railroad Corporation,~

concealing the identity of the true acquirer Consol

(which lacked condemnation power). App. at

1160A. Upshur told plaintiffs that if they refused

42a

Appendix A

to sell Monongahela would exercise its power of

eminent domain and give a fixed price per acre

upon condemnation.

Following this scheme, Upshur agents

approached plaintiffs and negotiated for the

needed rights-of-way. Plaintiffs sold parcels to

Monongahela. When some plaintiffs initially

refused or hesitated, Upshur agents made

thinly-veiled threats to induce them to sell. For

example, an Upshur agent threatened to bring

condemnation proceedings against James and

Linda Hughes. The Hughes sold their 1.5 acre land

for $90,000. An Upshur agent threatened to

condemn Mark and Charlotte Headlee’s property

for $700 per acre. The Headlees sold their 26 acre

land for $168,000. An Upshur agent threatened

John and Linda Yesenosky, whose son was

afflicted with acute asthma, that trains could be

parked across their driveway. The Yesenoskys sold

their 3.6 acre land for $67,000. In some of these

instances, either Upshur agents or defendant

attorneys told plaintiffs that part of the purchase

price would be tax free.

Among the landowners, five — Grover and

Imogene Phillippi, John and Sharon Culp, and

Sarah Closser — either discovered Consol's

undisclosed role or were land speculators. Upon

the advice of their attorneys, they refused to

accept Upshur’'s original purchase offers. Because

these landowners were fully informed and on equal

footing with the defendants, Upshur agents were

forced to pay _ substantially higher prices.

Specifically, the Phillippis sold 5.2 acres for

$600,000 plus the installation of railroad siding.

The Culps sold 13.3 acres for $1 million. And

Closser sold 1.9 acres for $445,000.

43a

Appendix A

On April 19, 1983, nine plaintiffs filed eight

complaints against Consol, Consol-PA, Consol

Land Development Company, Monongahela, RBW,

MTB, Ewing Pollock, Esq., his law firm, Upshur,

and Upshur agents David Boggs, William Reese

and Mike Wilson. Plaintiffs alleged violations of

RICO, civil conspiracy, and common law fraud.

One plaintiff, Dorothy Loughman, also alleged

attorney malpractice against Pollock. All eight

complaints were consolidated for trial purposes.

Defendants moved for partial summary judgment

on plaintiffs’ claim that Upshur’ agents

misrepresented Monongahela’s power of eminent

domain. They contended Monongahela had the

power to condemn plaintiffs’ properties. On August

6, 1986, the district court granted defendants’

motion, but sent the remaining claims of

fraudulent misrepresentation, RICO violations, and

civil conspiracy to the jury. Finding most of the

defendants liable, the jury awarded $5,360,500 in

compensatory damages, trebled under RICO. See

18 U.S.C. § 1964(c). It also awarded $5,500,000

in punitive damage because it found defendants

acted outrageously.

The district court believed the jury based its

compensatory award on the testimony of plaintiffs’

land valuation expert, Mr. Gary Bodnar. Bodnar

opined that the highest and best use as railroad

rights-of-way determines market value of the

properties. Because a railroad right-of-way is

commercial or industrial property, Bodnar

calculated the market value by comparing the

properties with purchase prices of other

commercial and industrial properties as well as

prices eventually obtained by Closser, the

Phillippis, and the Culps.

44a

Appendix A

Defendants moved for judgment n.o.v. on all

claims. On October 22, 1987, the district court

granted defendants’ motion for the RICO claims for

it concluded plaintiffs failed to satisfy RICO's

“continuity” requirement. Supp. App. at 127-28. It

also set aside the compensatory damage award

because the award was “obscenely excessive.” Id.

at 123. The court suggested remittitur, but when

the parties disagreed on the amount of damages

to remit it ordered a new damages trial. Plaintiffs

moved for reconsideration of the district court's

orders. On May 17, 1988, the court reinstated the

RICO verdicts, vacating in part its October 22,

1987 grant of judgment n.o.v. On June 9, 1988,

it decided not to submit the issue of punitive

damages to a second jury.

On November 20, 1989, before the start of the

second trial, defendants moved to vacate the May

17 1988 order that vacated the judgment n.o.v. of

October 22, 1987 and reinstated the RICO claim.

On March 1, 1990, the court granted defendants’

motion to vacate the May 17, 1988 order,

reinstated the October 22, 1987 grant of judgment

n.o.v. on the RICO claim, and ordered retrial of

the punitive damages issue.

In the second trial on damages, the jury award

plaintiffs $4,262,677 in compensatory damages

and $674,000 in punitive damages. The defendants

moved for judgment n.o.v., new trial, and

reargument. The district court denied _ these

motions. Plaintiffs and defendants filed timely

appeals, alleging errors at both trial.

We address these issues raised by plaintiffs: (1)

whether plaintiffs satisfied the continuity

requirement under RICO; (2) whether Upshur

agents misrepresented Monongahela’s

45a

Appendix A

condemnation power: (3) whether the district court

abused its discretion by setting aside the first

damage award; (4) whether plaintiffs should be

entitled to prejudgment interest and delay

damages; and (5) whether the district court erred

by granting judgm®nt n.o.v. on plaintiff Dorothy

Loughman’s legal malpractice claim.

We address thes? issues raised by defendants:

(1) whether sufficient evidence existed to support

the first jury award of punitive damages; (2)

whether the districi court erred by instructing the

jury that a misrepresentation is actionable

regardless of mateflality if the misrepresentation

was made knowngly: (3) whether plaintiffs

justifiably relied on the Upshur agents’ statements

concerning the tax free nature of the property

transactions; and 4) whether certain comments

made by the judge in the first trial deprived

defendants of a fai trial.

ll. RICO CLAIM

The district court granted defendants’ motion for

judgment n.o.v. cn the federal RICO claims

because plaintiffs ‘ailed to prove the continuity

prong of RICO’s “pattern of racketeering activity”

requirement. Memorandum Opinion of March 1,

1990 at 15 (Smith, J.). See 18 U.S.C. § 1962(c).

We will affirm.

When reviewing 4 Judgment n.o.v. we must

construe the eviderce in a light most favorable to

the non-movant ard search the record for the

minimum quantum Of evidence to support the jury

verdict. Burke v. Meassen, 904 F.2d 178, 181 (3d

Cir. 1990). Here we cannot find the minimum

quantum of evidence to support continuity.

46a

Appendix A

We begin our analysis with the statute. RICO,

the Racketeer Influenced Corrupt Organization Act,

18 U.S.C. §§ 1961-68 (1984 & Supp. 1990),

authorizes civil suits by “[aJnmy person injured in

his business or property by reason of a violation

of [18 U.S.C. § 1962].” Id. § 1964(c). To prove that

defendants violated section 1962, one must show

“a pattern of racketeering. activity.” This requires

commission of “at least two acts of racketeering

activity.” Id. § 1961(5). These predicate acts

include violating federal mail and wire fraud

statutes. 18 U.S.C. §§ 1341, 1343. Section 1961's

two act requirement does not define a pattern of

racketeering activity so much as it sets a minimum

condition for such patterns to exist. HJ. Inc. v.

Northwestern Tel. Co., 492 U.S. 229, 237 (1989).

The statute does not define such a pattern.

In H.J. Inc., the Supreme Court held that a

pattern of racketeering activity requires’ the

predicate acts be “related, and that they pose a

threat of continued criminal activity.” 492 U.S. at

239 (emphasis in original). Predicate acts are

related when they have “the same or similar

purposes, results, participants, victims, or

methods of commission, or otherwise are

interrelated by distinguishing characteristics and

are not isolated events.” Id., 492 U.S. at 240.

Because the district court granted judgment n.o.v.

on continuity grounds we will assume relatedness

and analyze continuity only. The H.J. Inc. Court

described continuity but fell short of defining it.

Continuity is a temporal concept. It is “both a

closed- and open-ended concept, referring either to

a closed period of repeated conduct, or to past

conduct that by its nature projects into the future

with a threat of repetition.” Id., 492 U.S. at 241.

47a

Appendix A

If a plaintiff alleges a RICO violation over a closed

period (“closed-ended” scheme), she must prove a

series of related predicates lasting a “substantial

period of time.” Id. at 242. If, however, she alleges

a RICO violation before continuity is established

(“open-ended” scheme), she must prove a “threat

of continuity.” Id. A threat of continuity exists

when the predicate acts are a part of defendant's

“regular way of doing business.” Id. That is,

defendant operates a “long-term association that

exists for criminal purposes.” Id.

Though the Court provides the basic structure

to amalyze continuity, continuity depends

ultimately on the “specific facts of each case.” Id.

The Court openly invites lower courts to define it.

Id. at 243 (“development of these concepts must

await future cases’).

In Marshall-Silver Constr. Co. v. Mendel, plaintiff

alleged acts of mail fraud and extortion lasting

seven months related to a scheme to force a single

business entity bankrupt. 894 F.2d 593 (3d Cir.

1990). We held that the span of seven months

showed “neither ‘long-term’ criminal conduct nor

the threat thereof.” Id. at 598.

In Banks v. Wolk, plaintiff alleged that two of

the defendants, Wolk and Weiner, misrepresented

facts to defraud him of his interest in a single

piece of real estate. 918 F.2d 418 (3d Cir. 1990).

The injury occurred within an eight month period

and there was no threat of “future misconduct by

Wolk or Weiner.” Id. at 423. As to _ this

closed-ended scheme, we held eight months was

insufficient to show continuity. See Kehr Packages,

Inc. v. Fidelcor, 926 F.2d 1406, 1418 (3d Cir. 1991)

(“eight-month period of fraudulent activity directed

at a single entity does not constitute a pattern,

48a

Appendix A

absent a threat of future criminal acts”); Hindes

v. Castle, 937 F.2d 868, 875 (3d Cir. 1991) (eight

month period failed to satisfy continuity).

Contrasting Marshall-Silver, Banks, Kehr, and

Hindes, we note that in H.J. Inc. the Court found

that violations lasting six years were sufficient to

show “substantial period of time” in a closed-ended

scheme or, alternatively, to show regular way of

doing business in an open-ended one. 492 U.S. at

250. In other circuits, only a period of years

appears substantial. See Fleet Credit Corp. v. Sion,

893 F.2d 441, 447 [lst Cir. 1990) (over four years);

Walk v. Baltimore & Ohio R.R., 890 F.2d 688, 690

(4th Cir. 1989) (ten years); Jacobson v. Cooper, 882

F.2d 717, 720 (2d cir. 1989) (unspecified “matter

of years"); Dana Corp. v. Blue Cross & Blue Shield

Mut. of N. Ohio, 900 F.2d 882, 887 (6th Cir. 1990)

(seventeen years).

After H.J. Inc., we found continuity in two cases.

Both were of the open-ended kind. That is, they

involved a future threat of RICO violations. In

Swistock v. Jones, we held that because plaintiffs

alleged future violations as to “other potential

transactions” plaintiff sufficiently raised the issue

of whether fraud was the defendant's regular way

of doing business (though the predicate acts lasted

only fourteen months). 884 F.2d 755 (3d Cir.

1989). And in Banks, we found that some of the

defendants, the Cohen brothers, used fraud as a

regular way of doing business. 918 F.2d at 424.

Thus as to the Cohen brothers, but not Wolk or

Weiner, we found continuity.

Plaintiffs identified the RICO violation as

“fraudulent misrepresentations, threats and

omissions . . . [that resulted in plaintiffs selling]

their property well below its true value.” App. at

49a

Appendix A

59 (Kent's Amended Complaint, { 45.) They alleged

violations of federal mail and wire fraud statutes,

18 U.S.C. §§ 1341, 1343, as the predicate acts

underlying RICO violations. See 18 U.S.C.

§ 1961(1). We will examine the evidence with

respect to both open- and closed-ended schemes.

As to open-ended scheme, we find no evidence

that defendants used fraud as a regular way of

doing business or formed an on-going criminal

association. Upshur threatened plaintiffs to obtain

specific parcels of property. Plaintiffs each had but

one property to sell; defendants had but one area

to acquire. There were no “potential” areas of

interest. Once defendants obtained the property,

they posed no future threat to plaintiffs or society.

The defendants’ fraud was not akin to the type

where hoodlums sell “insurance” to storekeepers

to cover them against breakage of their windows,

telling their victims they would return each month

to collect their “premiums”. H.J. Inc., 492 U.S. at

242. Theirs was akin to a one time racket to obtain

a specific bounty. We find no continuity under an

open-ended scheme.

As to closed-ended scheme, we find no evidence

of a substantial period of time. In the first trial,

Judge Teitelbaum first found no continuity and

then reversed himself. In the second trial, on

March 1, 1990, Judge Smith held that there was

no continuity. We agree that there was no

continuity.

Reviewing the record, Judge Teitelbaum made

the correct factual finding: Defendants’ scheme

“lasted from July 1981 until sometime in

early-1982." Memorandum Opinion of May 17,

1988 at 7 (Teitelbaum, J.). More precisely, Judge

Smith found the scheme lasted from June 1981 to

50a

Appendix A

June 1982. Memorandum Opinion of March l,

1990 at 13 (Smith, J.). In fact plaintiffs testified

that contacts with Upshur agents — the source of

these actions — started about September 1981

and ended in June 1982, a ten month period.

Loughman v. Consol-Pennsylvania Coal Co., 740 F.

Supp. 1114, 1120 (W.D. Pa. 1990).

All the evidence points to a short term operation.

The Property Acquisition Agreement between

Consol and Monongahela shows they anticipated

needing Upshur for only 120 days. When all the

property in the “Areas of Interest” were acquired,

Upshur was to be discharged. The agreement

shows no intent to acquire more land than

originally contemplated. It specifically links the

existing spur to all mines in the area and does

not mention the need for more construction of

spurs or taking of private property. When the

defendants acquired all ‘the property in the areas

of interest, the fraud was complete. In short,

defendants worked a2 single-scheme, single-victim

(albeit a class of victims) operation that lasted one

year at most.

Because “duration is the sine qua non of

continuity” in a closed-ended scheme, the issue

then is whether twelve months is a substantial

period of time. Hindes, 937 F.2d at 873. In Hindes

we hinted that one year is not a substantial period

of time. Id. at 875 (“we will not hold that although

eight months is not enough [to be a substantial

period of time], a year is"). We hold that twelve

months is not a substantial period of time.

We note that cases finding substantial period,

including H.J. Inc., dealt with fraudulent conduct

lasting years, sometimes ovér a decade. Such

findings of substantial time periods are consistent

Sla

Appendix A

with Congress’ intent to combat ‘long-term

criminal conduct.” H.J. Inc., 492 U.S. at 242.

Recently, we noted that “[ajlthough RICO has not

been limited to organized crime activity, we must

not overlook that it was occasioned by Congress’

perception of the danger posed by organized

crime-type offenses, which are almost by definition

continuing.” Hindes, 937 F.2d at 874.

The time period of this case belongs with those

of Marshall-Silver (seven months), Banks (eight

months), Kehr (eight months), and Hindes (eight

months). We therefore find no continuity under a

closed-ended scheme. In Hindes we declined to set

forth a “litmus test” to measure duration. Id. at

875. We still decline. We conclude only that there

is no qualitative difference between eight and

twelve months for the purposes of RICO continuity.

Ill. FRAUD UNDER PENNSYLVANIA LAW

MONONGAHELA’S CONDEMNATION POWERS

Plaintiffs claimed that when seeking to acquire

the railroad rights-of-way defendants fraudulently

misrepresented, among other things, that

Monongahela had power to condemn private

property. The district court found this

representation to be true, holding that as a matter

of law Monongahela had eminent domain powers.

It granted partial summary judgment for

defendants as to that representation, but sent

other alleged misrepresentations to the jury.

Plaintiffs appeal this grant of partial summary

judgment. We have plenary review and will affirm.

Plaintiffs asserts that Monongahela did not have

eminent domain power for three reasons: (1)

52a

Appendix A

because it lacked the Interstate Commerce

Commission's (ICC) approval to construct the new

track; (2) because there was no public use to

justify condemnation; and (3) because the track

was outside Monongahela’s chartered area.

First, we disagree with plaintiffs as to their first

reason. To begin, we note that ICC approval is

required when a rail carrier seeks to construct,

operate or acquire an additional line or extension.

49 U.S.C. § 10901(1). It, however, is not required

when a rail carrier seeks to construct, operate, or

acquire ani intra-state spur. 49 U.S.C.

§ 10907(b)(1). Whether a track is a “spur” or

“extension” is a mixed question of law and fact.

United States v. Idaho, 298 U.S. 105, 109 (1936).

If the proposed track is designed to transport

goods between different points of shipment or to

invade the territory occupied by another railroad,

that track is an extension. See Texas & Pac. Ry.

v. Gulf, Colo. & Santa Fe Ry., 270 U.S. 266, 278

(1926); Nicholson v. ICC, 711 F.2d 364, 368 (D.C.

Cir. 1983), cert. denied, 464 U.S. 1056 (1984). If,

however, the track is “designed and used for

loading, unloading, switching, and other purposes

connected with, and incidental to, but not actually

and directly used for [transporting goods between

two different points of shipment],” that tract is a

spur and lies outside ICC jurisdiction. Nicholson,

711 F.2d at 367-368. Among other factors to be

considered in determining whether it is a spur are

the length of the addition; whether the proposed

addition will serve only a single customer; and

whether the carrier had been requested by the

customer to provide service. See Pennsylvania R.R.

Co. v. Reading Co., 132 F. Supp. 616, 621-22 (E.D.

Pa. 1958).

53a

Appendix A

The district court correctly found that the

proposed track was a spur. Though a track's

designation itself does not determine its character

(extension or spur), the track in question is

sufficiently local to preclude ICC jurisdiction.

Nicholson, 711 F.2d at 368, n.12. The track runs

from the Bailey Mine in Grand_ Enon,

Pennsylvania, to Waynesburg. It runs only 14.5

miles.' It is located wholly intra-state. It functions

as a route to unload and transfer shipments from

the Waynesburg line. It does not invade the

territory of another railroad. Only Monongahela

uses it. And it serves only Consol. In short, none

of its features evokes “national concern.” Texas &

Pacific, 270 U.S. at 277. The district court was

correct; ICC approval was unnecessary.

Second, we disagree with plaintiffs as to the

second reason. Plaintiffs contend that

Monongahela can only condemn for “public use.”

See U.S. Const. amends. V; Pa. Const., art. I,

§ 10; Id., art. X, § 4. The proposed use, they

contend, is private.

When determining what constitutes “public use,”

the Supreme Court defers to legislative decisions.

Hawaii Housing Auth. v. Midkiff, 467 U.S. 229, 241

(1983) (Court will defer to legislative decision

regarding public use unless that decision is

unreasonable). That property is taken by eminent

1. The landowners cite Central of Georgia Railway, 336 I.C.C.

623 (1970) for the proposition that a 14.5 mile track could

not be a spur. In Central of Georgia Railway, the ICC

concluded that a 14.45 mile track costing more than $3 million

was an extension. The decision was based on the length of

the track and the cost alone. We refuse to adopt this reasoning

since, a track's designation depends on its use, not the length

and cost alone.

54a

Appendix A

domain and is transferred to a private party can

still fall within the gambit of public use. This is

so even when the motive for taking is to give to a

private party. Id., 467 U.S. at 243-44. Thus, under

the United States Constitution “public use” is a

broad concept.

Pennsylvania law is much the same. A

condemning authority may only take for public

use. The legislature may not grant the condemnor

the right to take private property for private use.

See Philadelphia Clay Co. v. York Clay Co., 241

Pa. 305, 309-310, 88 A. 481, 482 (1913); Borough

of Big Run v. Shaw, 16 Pa. Commw. 623, 626,

330 A.2d 315, 317 (1975). Notwithstanding, a

taking retains its public character even when a

portion of it benefits a private party. In re Franklin

Town Project-Philadelphia, 19 Pa. Commw. 272,

280-81, 339 A.2d 885, 889, cert. denied, 423 U.S.

992 (1975). See Dornan v. Philadelphia Hous.

Auth, 331 Pa. 209, 200 A. 834 (1938).

In Ptoneer Coal Co. v. Cherrytree & Dixonville

R.R., the Pennsylvania Supreme Court reasoned

that public use should be broadly defined when

the use benefits the Commonwealth. 272 Pa. 43,

116 A. 45 (1922). When defendant railroad

condemned property to extend its track to reach

a coal mine, the Court found public use because

“the life, happiness and prosperity of the people of

Pennsylvania depend to a very large degree upori

getting the coal supply of the state out of the

mines, on its way to the consumer.” Id., 272 Pa.

at 52, 116 A. at 48. See Philadelphia, Wilmington

& Baltimore R.R. v. Williams, 54 Pa. 193 (1867)

(prosperity of city depended on transporting coal

by rail).

55a

Appendix A

Here, the district court found public use. We

agree. The district court noted: “[Manor Reserve,]

once at full production, will produce 3,000,000

tons of coal per year and will employ 350 people.

The coal extracted from the mine has an average

sulfur content of 1.7%, a low and desirable level

that complies with emission standards generally

applicable in the United States and Europe.” Supp.

App. at 115-116. The Manor Reserve mine and the

track running to it benefit the Commonwealth's

coal mining industry and the public. That the mine

serves a private coal company does not diminish

the public value. Constructing a spur will tap vital

coal resource, provide fuel for the Commonwealth,

create jobs, and better the environment.

Last, we disagree with plaintiffs as to their third

reason. They conterd that because the Manor

track runs outside Monongahelas charter area

Monongahela lacked the power to condemn

property outside of its franchise without first

obtaining a certificate from the Commonwealth's

Public Utility Commission (PUC). See 66 Pa. Cons.

Stat. Ann. § 1104.

We need not consider this contention in light of

what happened at trial. Judge Teitelbaum

instructed the jury that “[y]lou will reach the issue

of damages only if you find that the plaintiffs have

established all of the elements of any of their

claims.” Supp. App. 218. This instruction reflects

the correct assumption that since plaintiffs had

but one property each they could have suffered as

a result of the misrepresentations only once,

regardless of the number of misrepresentations

committed. The jury found that fraud was

committed and awarded damages to plaintiffs.

“Th

56a

Appendix A

Thus even if this additional misrepresentaticn was

made, it is irrelevant.

In sum, the district court properly granted

partial summary judgment on plaintiffs’ claim that

Upshur agents misrepresented Monongahela’'s

condemnation powers.

JURY INSTRUCTIONS ON FRAUDULENT

MISREPRESENTATION

The district court instructed the jury, “[ilf it is

shown that a misrepresentation was made

knowingly, then the misrepresentation need not be

material.” Supp. App. at 216. Defendants argue

that when the district court gave this instruction

it erred as a matter of law. We disagree and will

affirm. Our review of this legal issue is plenary.

Under Pennsylvania law a fraud claim requires

plaintiff to prove either a knowing

misrepresentation or nonprivileged failure to

disclose some existing fact. If, however, “the

misrepresentation is innocently made, then it is

actionable only if it relates to a matter material to

the transaction involved.” Smith v. Renault, 387

Pa. Super. 299, 305-06, 564 A.2d 188, 192 (1989)

(quoting Shane v. Hoffman, 227 Pa. Super. 176,

181-82, 324 A.2d 532, 536 (1974)), overruled on

other grounds, Aiello v. Ed Saxe Real Estate, Inc.,

508 Pa. 553, 560-61, 499 A.2d 282, 286 (1985).

Thus, materiality becomes important only when

the misrepresentation was innocently made or

when it involved a privileged failure to disclose.

The district court's instructions adequately

reflected this distinction.

57a

Appendix A

Even if we held all the misrepresentations were

innocently made and materiality became a

concern, the “error” is harmless. Upshur's

misrepresentations were most material. The gross

disparity between the prices obtained by the

plaintiffs and those who knew of Consol's role

(Closser, the Phillippis, and the Culps) bespeaks

materiality. Moreover, while defendants correctly

point out that Upshur had no duty to disclose

Consol's role, they neglect to mention that Upshur

agents affirmatively misrepresented that

Monongahela was the sole principal. See Chiarella

v. United States, 445 U.S. 222, 227-228 (1980).

This representation constituted more than “mere

silence”; it constituted active concealment. It

amounted to common law fraud. Renaut, 387 Pa.

Super. at 306, 564 A.2d at 192.

JUSTIFIABLE RELIANCE ON TAX

REPRESENTATIONS

The defendants moved for judgment n.o.v. as to

the liability based on the representation of the tax

free nature of the transactions. They claim there

was insufficient evidence for the jury to conclude

that plaintiffs justifiably relied on defendants’

representation. Because they are not tax experts,

defendants argue, plaintiffs should have

independently investigated the tax matter. The

district court denied the motion. We will affirm.

The same standard of review applies to this

denial of a judgment n.o.v. as it did for the denial

of the RICO judgment n.o.v., supra. See Kinnel v.

Mid-Atlantic Mausoleums, Inc., 850 F.2d 958, 961

(3d Cir. 1988).

58a

Appendix A

Justifiable reliance on a misrepresentation is an

element of common law fraud. Klemow v. Time,

Inc., 466 Pa. 189, 197 n.17, 352 A.2d 12, 16 n.17,

cert. denied, 429 U.S. 828 (1976). Moreover,

“lwjhere the means of obtaining information are

not equal the positive representations of the

person who is supposed to possess superior means

of information may be relied on.” Siskin v. Cohen,

363 Pa. 580, 70 A.2d 293 (1950) (quotation

omitted).

The Upshur agent approached plaintiff

landowners, told them that he _ represented

Monongahela, denied involvement of Consol,

offered a purchase price, threaten plaintiffs that

they would receive a lower fixed condemnation

price if they refused to accept the agent's offer,

and stated that part of the purchase price paid

would be tax free. Upshur agents possessed

superior access to information, initiated the sales

of property, and presented themselves as land

experts. Under these’ circumstances, the

negotiating parties did not stand on equal footing

and plaintiffs justifiably relied on the Upshur

agent's statements concerning the tax

consequences of a _ sale without making an

independent investigation.

Justifiable reliance is even more evident in the

cases where defendants’ attorneys told plaintiffs of

the tax free consequences of the sale. A lay person

may justifiably rely on a lawyer's statement of fact

or opinion of law though he knows the lawyer is

representing a client whose interest is adverse to

his own. Restatement (Second) of Torts, § 545,

comment d.

59a

Appendix A

IV. DAMAGES

COMPENSATORY DAMAGE AWARD

Plaintiffs contend that the district court erred by

granting a new damages trial. We agree and will

reverse. We review for an abuse of discretion.

Semper v. Santos, 845 F.2d 1233, 1236 (3d Cir.

1988).

Under Pennsylvania law, the measure of

damages for a fraud claim is the actual loss that

the fraud inflicts. Savitz v. Weinstein, 395 Pa. 173,

178 & n.2, 149 A.2d 110, 113 & n.2 (1959); Peters

v. Stroudsburg Trust Co., 348 Pa. 451, 35 A.2d

341, 343 (1944); Delahanty v. First Pa. Bank, N.A.,

318 Pa. Super. 90, 117-18, 464 A.2d 1243, 1257

(1983). Actual loss equals the fair market value of

the property when sold minus the fraudulently

paid price. Stroudsburg Trust, 348 Pa. at 454, 35

A.2d at 343; Bishoff v. Valley Dairy Co., 302 Pa.

125, 153 A. 133 (1931).? The issue is whether the

actual loss should be based on the properties’ use

as agricultural lands or the highest and best use

as railroad rights-of-way.

At trial, plaintiffs’ expert, Bodnar, testified that

he valued the properties by assuming the highest

and best use parameter: that is, value as a

railroad right-of-way. To determine this value, he

considered the selling prices of the Closser, Culp,

and Phillippi parcels.

2. The defendants claim that the landowners are only entitled

to out-of-pocket losses rather than the benefit of the bargain.

The cases cited, however, concern fraudulent

misrepresentations by a seller to a purchaser. Here, we are

faced with the converse situation.

60a

Appendix A

The district court rejected Bodnar's testimony.

Because it believed that the jury relied on Bodnar's

testimony to compute the damages, the court

rejected the jury award. It characterized Closser,

the Culps, and Phillippis as “hold-outs.* Since

prices paid to hold-outs far exceed true market

value, the court reasoned that Bodnar's valuations

do not reflect the fair market value.

Under Pennsylvania law, a property owner can

show her property's special and potential use as

a railroad right-of-way when she faces

condemnation. See North Shore RR. v.

Pennsylvarda Co., 251 Pa. 445, 96 A. 990 (1916);

Commonwealth Dep't of General Servs. v. Fake, 45

Pa. Commw. 46, 405 A.2d 971 (1979). To prove

highest and best use, a condemnee must show the

land is adaptable to such use and a market need

existed for such use at the time of the

condemnation. Fake, 45 Pa. Commw. at 50-51,

405 A.2d at 974. See United States v. 46,672.96

Acres of Land, 521 F.2d 13, 15 (10th Cir. 1975).

Contrary to the district court's conclusions,

Bodnar properly referred to the prices paid to the

“hold-outs.” A railroad right-of-way existed across

many of the plaintiffs’ properties long before

Upshur agents approached them. The year before

the Upshur agents offered to buy the property,

Consol approached some plaintiffs to see if they

were interested in selling. Thus plaintiffs’

properties were adaptable for use as railroad

rights-of-way and Bodnar properly calculated this

potential into the value.

As to fair market value, the prices paid to the

hold-outs reflect the market value. Consol needed

each and every piece of property to construct their

track. Though the district court correctly

6la

Appendix A

characterized Closser, Culp and Phillippi as

“hold-outs”, it neglected to consider that plaintiffs

would have demanded more money had they

known what Closser, Culp and Phillippi knew —

that Consol was involved and that Monongahela

could not have condemned their properties for

fixed prices. But for the defendants’ scheme

misrepresenting the circumstances surrounding

Monongahela’s property acquisitions, plaintiffs

would have commanded higher prices. And these

prices more accurately reflect fair market value.

The district court abused its discretion by

discounting Bodnar's testimony and setting aside

the first damage award.

PUNITIVE DAMAGE AWARD

The defendants contend that there was

insufficient evidence to support the jury’ award of

punitive damages against some of the defendants.

We disagree and will affirm.

“Fraud, alone, is not sufficient” to justify an

award of punitive damages. Golomb v. Korus, 261

Pa. Super. 344, 348, 396 A.2d 430, 432 (1978).

The conduct must be outrageous for a jury to

award punitive damages. Rizzo v. Haines, 520 Pa.

484, 507, 555 A.2d 58, 69 (1989); Pittsburgh

Outdoor Adv. Co. v. Virginia Manor Apts., Inc., 436

Pa. 350, 353, 260 A.2d 801, 803 (1970). Where

the defendants are agent and principal, the agent's

conduct must be “clearly outrageous to justify the

vicarious imposition of exemplary damages upon

the principal.” Delahanty, 318 Pa. Super. at 132,

464 A.2d at 1264 (quoting Skeels v. Universal

C.I.T. Credit Corp., 335 F.2d 846, 851-52 (3d Cir.

62a

Appendix A

1964)). Plaintiffs must show outrageous conduct

by a preponderance of the evidence. See Martin v.

Johns-Manville Corp., 508 Pa. 154, 494 A.2d 1088,

1098 (1985).

Plaintiffs clearly showed outrageous conduct.

Upshur agent Boggs told the Hughes that they

would have to be out of their house within two

months though they had. no interest in selling

their property. He told the Headlees: “[YJou forget

Consol. You are dealing with Mon railway system

now.” App. at 116A. When the Headlees expressed

concern about the proximity of the track to their

house and children, Boggs stated that if the

right-of-way were condemned, the railroad could

place the tracks within 10 feet of their home and

is under no duty to fence the track or to otherwise

provide for the safety of the Headlees’ children. We

hold that the jury could reasonably conclude that

defendants acted outrageously when they obtained

property by fraud, economic coercion, and

thinly-veiled personal threats.

DELAY DAMAGES AND PREJUDGMENT

INTEREST

The district court awarded delay damages under

Pa. R. Civ. P. 238. We have plenary review and

will reverse. Rule 238 allows for interest on

compensation awards arising from “bodily injury,

death or property damage.” Because this case

involves lost profits the district court erred by

allowing them.

As for prejudgment interest, the district court

refused to award it. We agree and will affirm.

When deciding whether to award prejudgment

63a

Appendix A

interest to a party, a court must consider “whether

countervailing equitable considerations militate

against such a surcharge.” See American Mut.

Liab. Ins. Co. v. Kosan, 635 F. Supp. 341, 346

(W.D. Pa. 1986), affd, 817 F.2d 751 (3d Cir.

1987).

In Arkla Exploration Co. v. Boren, the court of

appeals refused to award prejudgment interest

where the plaintiff did not preserve the issue

under Fed. R. Civ. P. 51 at the time the district

court instructed the jury on the amount of

damages to be entered should they choose to

return a liability verdict. 411 F.2d 879, 883-884

(8th Cir. 1969).

Likewise plaintiffs failed to preserve the issue

here. Plaintiffs first moved for prejudgment interest

in June 1990, seven years after filing this action

in federal court. This was too late. Plaintiffs

explain this delay by noting that the district court

awarded them delay damages under Pa. R. Civ. P.

238. Since American Enka Co. v. Wicaco Mach.

Corp. prevents a party from obtaining both delay

damages and prejudgment interest, plaintiffs argue

that they were forced to rely on the court's award

of delay damages and could not _ request

prejudgment interest. 686 F.2d 1050, 1057 (3d

Cir. 1982). This decision was imprudent. Plaintiffs

should have moved for both remedies at the outset

and let the court decide which to grant. We hold

that plaintiffs’ untimely request for prejudgment

interest constitutes a countervailing equitable

consideration militating against such a surcharge.

V. LEGAL MALPRACTICE

Plaintiff Dorothy Loughman claims that the

district court erred when it granted Attorney Ewing

64a

Appendix A

Pollock judgment n.o.v. on her legal malpractice

action. We agree and will reverse.

To establish legal malpractice under

Pennsylvania law, plaintiffs must show three

elements: (1) employment of the attorney or other

basis for a duty owed to the client; (2) failure of

the attorney to exercise ordinary skill and

knowledge; and (3) the. attorney's negligence

proximately caused damage to the client. Rizzo,

520 Pa. at 499, 555 A.2d at 65 (quoting Schenkel

v. Monheit, 266 Pa. Super. 396, 405 A.2d 493, 494

(1977)). Viewing the evidence in a light .most

favorable to Loughman, we conclude that the

evidence was sufficient to support a finding of legal

malpractice.

Loughman owned 50.79 acres of land in the area

of interest. An Upshur agent approached her and

claimed that he represented Monongahela. He

offered to purchase her property for $60,000.

Loughman rejected the offer. The agent threatened

that Monongahela would use its condemnation

authority to take a 13 acre right-of-way for $1000

per acre. If Monongahela condemned the 13 acres,

most of Loughman’s property would be rendered

inaccessible.

The same day Loughman telephoned her

attorney Pollock. She had known Pollock for about

forty-two years, and he had handled legal matters

for her and her family. At that time Pollock was

working for Monongahela, unbeknownst to

Loughman. Loughman explained the situation, and

Pollock told her not to worry because Monongahela

would be fair. He also told her she did not need

an attorney to negotiate with the Upshur agent.

Under these circumstances, we _ conclude

sufficient evidence exists to find an attorney-client

65a

Appendix A

relationship, lack of ordinary care, and proximate

cause. When Loughman called Pollock, an

attorney-client relationship was formed. She called

him to seek his legal advice. He accepted this offer

and readily gave advice. That Pollock previously

represented her only furthers this conclusion.

When Pollock told her that Monongahela would be

fair without knowing what price had been offered,

and when he failed to tell her Consol was involved

and he represented Consol, Pollock failed to

exercise ordinary skill and knowledge. Since

Loughman testified that she agreed to sell only

after she had consulted with Pollock, his advice

and representations proximately caused her lost

profits. Therefore the district court erred by failing

to uphold the jury verdict on malpractice.?

VI. DISTRICT COURTS REMARKS

Upshur agents contend the district court

deprived them of a fair trial by calling them lars.

Specifically, they complain about the district

court's remarks that they “lied” if they represented

3. The defendant attorneys argue that there is no evidence

that Pollock fraudulently misrepresented Monongahela’s

condemnation powers to Dorothy Loughman, made any

misrepresentations concerning the role of Consol or any other

defendant in the transaction, or told her that a portion of the

purchase price would be tax free.

Notwithstanding these arguments, the requisite minimum

quantum of evidence supports the jury verdict against Attorney

Pollock. Pollock told Loughman that Monongahela would treat

her fairly without knowing the offered price for her parcel.

Furthermore, he failed to disclose his representation of the

defendants although he had a duty to do so. This evidence

adequately supports a jury finding that Pollock committed

fraud in his dealings with Loughman.

66a

Appendix A

that property could be condemned for a fixed price.

We disagree and will affirm.

In American Home _ Assur. ov. Sunshine

Supermarket, we stated:

A federal judge is permitted to summarize and

comment upon the evidence . . . . The court's

comments, however, may not confuse or mislead

the jury, or become so one-sided as to assume

an advocate’s position.

753 F.2d 321, 327 (3d Cir. 1985). Here, the district

court merely characterized the great weight of the

testimony and drew a correct conclusion. If the

district court's comments confused or misled the

jury, we still find no prejudicial error for the judge

cured any error. He instructed the jury that only

its decision counts and that it does not “have to

be influenced” by anything he thinks or says.

VII. CONCLUSION

We conclude that the district court erred by

setting aside the first damage award; the first

award of punitive damages was adequately

supported by the record; plaintiff landowners are

not entitled to either prejudgment interest or delay

damages; the district court properly granted

judgment n.o.v. on the RICO claim since the

continuity requirement was not satisfied; the

Upshur agents’ representation of Monongahela’s

condemnation power was a true statement; the

‘district court properly instructed the jury as to the

law of misrepresentation; the plaintiffs could have

justifiably relied on the Upshur agents’ statements

concerning the tax free nature of the property

transactions; the district court erred by granting

judgment n.o.v. on landowner Loughman’s legal

67a

Appendix A

malpractice claim; and the district court’s remark

did not deprive defendants of a fair trial. We will

vacate the second damage award and reinstate the

first award returned by the jury.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

68a

Appendix A

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 90-3466

JAMES E. HUGHES and LINDA L. HUGHES,

Appellant

Vv.

CONSOL-PENNSYLVANIA COAL COMPANY, et al.

[OTHER CAPTIONS OMITTED]

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE WESTERN DISTRICT OF

PENNSYLVANIA

(D.C. Civil Action Nos. 83-00921, 83-01674, 83-01675, 83-01676,

83-01677, 83-01678, 83-01679, 83-01754)

Present: Sloviter, Chief Judge, Nygarrd, Circuit Judge, and Katz,

District Judge*.

AMENDED JUDGMENT

These causes came on to be heard on the records from the

United States District Court for the Western District of

Pennsylvania and were argued by counsel January 28, 1991.

* Honorable Marvin Katz, United States District Judge for the Eastern

District of Pennsylvania, sitting by designation.

69a

Appendix A

On consideration whereoof, this Court hereby holds that the

said District Court erred by setting aside the first damage award;

the first award of punitive damages was adequately supported

by the record; plaintiff landowners are not entitled to either

prejudgment interest or delay damages; the district court properly

granted judgment n.o.v. on the RICO claim since the continuity

requirement was not satisfied; the Upshur agents’ representation

of Monongahela’s condemnation power was a true statement; the

district court properly instructed the jury as to the law of

misrepresentation; the plaintiffs could have justifiably relied on

the Upshur agents’ statements concerning the tax free nature of

the property transactions; the district erred by granting judgment

n.o.v. on landlowner Loughman’s legal malpractice claim; and

the district court’s remark did not deprive defendants of a fair

trial. Accordingly, it is now here ordered and adjudged that the

judgments of the said District Court appealed here are vacated

as to the second damage award and the causes are remanded to

the said District Court with instruction to reinstate the first awards

returned by the jury. All of the above is accordance with the

opinion of this Court.

ATTEST:

CLERK

Dated: December 20, 1991

70a

APPENDIX B — MEMORANDUM ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE WESTERN DISTRICT

OF PENNSYLVANIA DATED JUNE 18, 1996

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Civil Action Nos. 83-921,

83-1674, 83-1675, 83-1676,

83-1677, 83-1678, 83-1679 &

83-1754

DOROTHY LOUGHMAN, et al.,

Plaintiffs,

vs.

CONSOL-PENNSYLVANIA COAL CO., et al.,

Defendants.

MEMORANDUM ORDER

This court conducted a new trial in these consolidated cases,

on damages only, in March, 1990. The parties have filed various

post-trial motions, which we address here seriatim. As a

preliminary matter, however, plaintiffs have moved to strike

defendants’ post-trial motions as exceeding the scope of the retrial

or for having been waived by defendants. We have addressed only

motions relevant to the second trial. In that regard, we find that

defendants adequately have preserved these points at trial, with

one exception noted below. The motion to strike is denied.

Tla

Appendix B

|. Defendants’ Motions For JNOV and New Trial

Defendants Consol Pennsylvania Coal Company,

Consolidation Coal Company, Consol Land Development

Company, The Monongahela Railway Company, Rheinbraun U.S.

Corporation, Rheinische Braunkohlenwerke A.G., and Marie

Theresa Bergbaugesellschaft MHB (the ‘‘Coal Company

defendants’’) move for a judgment notwithstanding the verdict

on grounds that plaintiffs introduced insufficient evidence at trial

to support a finding of any damages, compensatory or punitive.

The standard for evaluating a judgment notwithstanding the

verdict is whether the evidence and justifiable inferences most

favorable to the prevailing party afford any rational basis for

the verdict. Bhaya v. Westinghouse Elec. Corp., 832 F.2d 258,

259 (3d Cir. 1987) cert. denied, 109 S.Ct. 782 (1989). Where the

evidence is contradictory, a judgment notwithstanding the verdict

is inappropriate. Bonjorno v. Kaiser Aluminum & Chemical Corp..,

752 F.2d 802 (3d Cir. 1984), cert. denied, 477 U.S. 908 (1986).'

1. The Third Circuit has explained the JNOV standard as follows:

[S]ince the credibility of witnesses is peculiarly for the jury,

it is an invasion of the jury’s province to grant a new trial

merely because the evidence was sharply in conflict. The trial

judge, exercising a mature judicial discretion, should view

the verdict in the overall setting of the trial; consider the

character of the evidence and the complexity or simplicity

of the legal principles which the jury was bound to apply

to the facts, and abstain from interfering with the verdict

unless it is quite clear that the jury has reached a seriously

erroneous result. The judge’s duty is essentially to see that

there is no miscarriaga of justice. If convinced that there has

been, than it is his duty to set the verdict aside; otherwise not.

Lind v. Schenley Industries, Inc., 278 F.2d 79, 89 (3d Cir.), cert. denied, 364

U.S. 835 (1960).

72a

Appendix B

In these cases, plaintiffs presented expert testimony concerning

the fair market value of their properties which would support

the jury’s verdict. Therefore, we deny the motion for JNOV.

The Coal Company defendants also seek a new trial on several

grounds. First, defendants claim that the amount of damages set

by the jury is so excessive as to warrant a remittitur or, in the

alternative, a new trial. An order directing plaintiffs to remit a

portion of the verdict in excess of the maximum amount

supportable by the evidence or, if remittitur is refused, to submit

to a new trial is the proper procedure in situations where no clear

judicial error or ‘‘pernicious influence’’ can be identified but where

the verdict is so large as to shock the conscience of the court.

Kazan v. Wolinski, 721 F.2d 911, 914 (3d Cir. 1983). In light

of the evidence presented at trial, we cannct say the size of the

verdict here is shocking.

Next, defendants allege that certain evidentiary errors by this

court necessitate a new trial. In particular, defendants attack the

court’s decision to admit into evidence the testimony of plaintiffs’

real estate experts and the testimony of David Book, an attorney

Involved in negotiations with defendants on behalf of some other

property sellers, not plaintiffs. We already have addressed the

admissibility of plaintiffs’ experts’ testimony by denying

defendants’ motions in limine. See Loughman v. Consol. Pa. Coal

Co., et al, No. 83-921, slip op. at 7-9 (W.D. Pa. January 31,

1990). We reiterate only that the Federal Rules of Evidence

establish a liberal policy of permitting expert testimony. In that

defendants did not challenge the qualifications of plaintiffs’ experts

and had ample opportunity to introduce their own experts on

the issue of fair market value, we see no error in our decision

to admit the testimony of plaintiffs’ experts.

73a

Appendix B

Likewise, we see no error in allowing David Hook to testify

about certain conduct of defendants which was consistent with

or similar to the conduct of defendants vis-a-vis the plaintiffs

in this case, such information being relevant to plaintiffs’ fraud

claims. Testimony by Mr. Hook outside the score of similar or

consistent conduct was merely cumulative in nature and created

no prejudice to defendants.

Defendants allege that plaintiffs’ counsel’s closing argument

was so inflammatory as to support the need for a new trial. In

that regard, defendants allege that counsel made references to

evidence not of record, that he made inappropriate references

to some of defendants’ nationalities, and that he improperly argued

the finding of liability by the previous jury. After plaintiffs’

counsel’s closing and upon objections of defendants, this court

delivered a curative instruction to the jury.

A new trial may be ordered where counsel engages in improper

conduct having a prejudicial effect on the jury. Whether there

is prejudice depends on whether there is a reasonable probability

that the jury’s verdict was influenced by the conduct in question.

Northeast Women’s Center, Inc. v. McMonagle, 689 F. Supp.

465, 471 (E.D. Pa. 1988), aff’d in relevant part, remanded on

other ground, 868 F.2d 1342 (3d Cir. 1989). In light of the curative

instruction delivered to the jury, we find no reasonable probability

that the jury was influenced improperly by counsel’s comments.

Defendants have challenged the sufficiency of the jury charge,

complaining that it lacked an appropriate instruction concerning

nominal damages and vicarious liability and alleging that it was

generally confusing to the jury. As for the lack of an instruction

on nominal damages, there was never a request concerning such

a charge and therefore we find any objection now to its absence

to be untimely. Concerning the jury instruction on agency and

74a

Appendix B

vicarious liability, the court inclluded suf ficiently clear instructions

on these legal issues and we find defendants suffered no prejudice

on this point. Finally, we detected no confucion generally on the

jury’s part, nor did counsel complain that the charge was

potentially confusing, even though counsel were presented with

a copy of the charge well before it was delivered orally to the jury.

Finally, defendants have raised two due process arguments

in support of their new trial motion. First, they complain that

with regard to the claims for punitive damages the retrial

improperly bifurcated the liability and amount of damages issues.

At the first trial, the jury found by special interrogatory that

defendants’ conduct was outrageous, and that defendants were

liable for punitives. Because a RICO claim remained in the case

at that time, Judge Teitelbaum’s order vacating the damage

amounts did not expressly address punitivies, the Couut having

determined that the treble damage provision of RICO preclulded

the punitives. At the time of retrial, the RICO claims having been

dismissed by our Order of March 1, 1990, we determined that

Judge Teitelbaum’s Order directing that the first jury’s calculation

of damages was excessive required a retrial of all damages issues.

We see no error in retrying the amount of punitives again, and

in particular, we find that no prejudice to defendants resulted

since the collective sum of punitives assessed at the second trial

represented more than a four million dollar reduction from the

amount assessed at the first trial.

Defendants’ second due process argument is that Pennsylvania

law provides insufficient guidance to juries in calculating punitive

damage awards. We do not recollect defendants previously raising

this objection, either in formal motions or in the conferences

concerning the jury instructions. Although defendants have not

expounded on the legal basis for this argument in the form of

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Appendix B

a memorandum or in the motion itself, we presume that defendants

are in effect challanging the Pennsyivania Supreme Court’s recent

holding that the amount of punitive damages need not bear a

reasonable relationship to compensatory damages award ed in

a particular case. Kirkbride v. Lisbon Contractors, Inc., 521 Pa.

97, 555 A.2d 800 (1989). Kirkbride may have eliminated one

standard for evaluating punitive damages; however, we find that

juries in Pennsylvania still have sufficient guidelines by which

to calculate the amount of punitive damages to be assessed, if

any. The relevant factors, set forth in the Restatement of Torts

(Second), have been adopted by the Pennsylvania courts and were

included in this court’s jury instructions in the instant cases:

In assessing punitive damages, the trier of fact can

properly consider the character of the defendant’s

act, the nature and extent of the harm to plaintiff

that the defendant caused or intended to cause and

the wealth of the defendant.

Restatement (Second) of Torts § 908(2) (1979). Accord Kirkbride,

521 Pa. at 100, 555 A.2d at 802; Chuy v. Phil. Eagles Football

Club, 595 F.2d 1265, 1277 (3d Cir. 1979). Where the amount of

punitive damages is so disproportionate in light of these factors

that it shocks the court’s sense of justice, the court may, in its

discretion, remit the damages to a more reasonable amount.

Kirkbride, 521 Pa. at 104, 555 A.2d at 803-04.

In light of the circumstances in the trial of these cases, we

find that defendants’ due process rights were adequately protected.

For the foregoing reasons, the post-trial motions filed by the

Coal Company defendants are denied.

76a

Appendix B

Defendants Ewing Pollock, Pollock Pollock & Thomas, the

Upshur Agency, Inc., David Boggs, Mike Wilson and William

Reese have also filed post-trial motions for judgment

notwithstanding the verdict and for a new trial. These motions

present us with nothing substantially different from the arguments

made by the coal company defendants; therefore, we also will

deny the other defendants’ motions for JNOV and for a new trial.

Il. Plaintiffs’ Motion to Impose Prejudgment Interest and To

Impose Delay Damages.

Plaintiffs seek delay damages under Rule 238 of the

Pennsylvania Rules of Civil Procedure. Contrary to Plaintiffs’

interpretation of the record, this Court has not ruled on this issue

previously. In addressing the post-trial motions from the first trial,

Judge Teitelbaum held that delay damages were appropriate.

Loughman v. Consol Pa. Coal Co. et al., No. 83-921 slip op.

at 4(W.D. Pa. October 22, 1987). Our analysis of the case law

leads us to the opposite conclusion and we will deny plaintiffs’

motion for delay damages.

Rule 238 provides for mandatory interest on compensatory

damage awards arising from bodily injury, death or property

damage, which interest is to be calculated from the date of the

complaint. Plaintiffs’ damages do not arise from bodily injury,

death or property damage. These cases do not present the kind

of damage to tangible property anticipated by Rule 238. They

arise from fraud in the making of contracts. We find them to

be tort cases and similar to an action for tortious interference

with a contract in that they allege lost profits from the sale of

Property. Rule 238 does not apply to cases involving lost profits

or income. Butler v. Flo-Ron Vending Co., 383 Pa. Super. 633,

655, 557 A.2d 730, 741 (1989), allocatur denied, ___. Pa. ___,

77a

Appendix B

567 A.2d 650 (1989); Temporaries Inc. v. Krane, 325 Pa. Super.

103, 115, 472 A.2d 668, 674 (1984); Contractor Utility Sales Cos.

v. Certain-Teed Corp., 748 F.2d 1151, 1157 (7th Cir. 1984)

(applying Pennsylvania law) (Dumbauld, J.), cert. denied, 470

U.S. 1029 (1985). Plaintiffs’ motion for delay damages is denied.

B. Prejudgment Interest

Plaintiffs also seek common law Prejudgment interest.

Common law pre-judgment interest is based on

the principle of compensetion and the

understanding that a plaintiff wrongfully deprived

of a sum of money is not made whole unless the

delay in recovery is accounted for.

* * *

. in Pennsylvania common law damages for

delay are recoverable in tort actions when the

amount is liquidated or capable of mathematical

ascertainment.

American Enka Co. v. Wicaco Mach. Corp., 686 F.2d at 1056,

1057. Prejudgment interest could be appropriate in these cases

because the amount of plaintiffs’ damage was ascertainable by

reference to the fair market value of the properties sold.

The decision to award damages in delay and the rate of

interest is in the discretion of the trial court. Sack v. Feinman,

495 Pa. 100, 432 A.2d 971 (1981); Ambromovage v. United Mine

Workers of America, 726 F.2d 972, 981 (3d Cir. 1984). Accord

Levy v. First Pennsylvania Bank, N.A., 338 Pa. Super. 73, 84,

78a

Appendix B

487 A.2d 857, 863 (1985).? There are four factors to consider when

contemplating an award of prejudgment interest:

1) whether the claimant has been less than diligent

in prosecuting the action;

2) whether the defendant has been unjustly

enriched;

3) whether an award would be compensatory; and

4) whether countervailing equitable considerations

militate against such a surcharge.

American Mut. Liability Ins. Co. v. Kosan, 635 F. Supp. 341,

346 (W.D. Pa. 1986) (Weber, J.), aff’d w/o op., 817 F.2d 751

(3d Cir. 1987); Pension Benefit Guaranty Corp. v. Greene, 570

F. Supp. 1483, 1503 (W.D. Pa. 1983), aff’d w/o op., 727 F.2d

1100 (3d Cir.), cert. denied, 469 U.S. 820 (1984).

Plaintiffs have been diligent in pressing their claims, having

filed them within a year of the last land transaction in question.

Given both juries’ determinations concerning liability and

damages, the second and third factors favor a grant of

prejudgment interest.

With respect to the fourth factor, defendants have raised the

issue of waiver by contending that Plaintiffs did not seek common

law prejudgment interest prior to the post-trial motion stage of

2. Contrary to defendants’ position that only the jury can grant prejudgment

interest, we are satisfied that the trial court may mold the verdict to include

it. Verner v. Shaffer, 347 Pa. Super. 206, 211, 500 A.2d 479, 482 (1985).

79a

Appendix B

this litigation. Our review of the record indicates that plaintiffs

did not seek common law prejudgment interest in their complaints

(including original and amended complaints), in their pretrial

calculations of damages or even in their post-trial motions filed

after the first trial in 1985.’

Having failed to preserve this issue during seven years of

litigation, we find that plaintiffs’ request for prejudgment interest

at this juncture is untimely. Arkla Exploration Co. v. Boren|,

411 F.2d 879, 883-84 (8th Cir. 1969) (no entitlement to

prejudgment interest where plaintiff did not preserve issue). The

equities clearly militate against granting interest, and plaintiffs’

motion for common law prejudgment interest is denied.

For the foregoing reasons, all post-trial motions filed by

defendants and plaintiffs are denied.

BY THE COURT,

s/D. Brooks Smith

D. Brooks Smith

United States District Judge

cc: All Counsel of Record

3. Plaintiffs sought Rule 238 delay damages after the first trial, which

request was originally denied but then was granted upon reconsideration.

80a

APPENDIX C — MEMORANDUM OF THE UNITED STATES

DISTRICT COURT FOR THE WESTERN DISTRICT OF

PENNSYLVANIA DATED MARCH 1, 1990

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Civil Action Nos. 83-921,

83-1674, 83-1675, 83-1676,

83-1677, 83-1678, 83-1679 &

83-1754

MEMORANDUM

SMITH, District J.

Defendants request reconsideration of their motions to grant

judgment notwithstanding the verdict, originally submitted after

these cases were tried to verdict in January and February, 1987.

Pursuant to our order of January 31, 1990, the parties have

provided us with supplemental briefs discussing the relevance of

the evidence admitted at the original trial before Judge Teitelbaum

in light of the United States Supreme Court’s holding in H.J.

Inc. v. Northwestern Sell Telephone Co., 109 S.Ct. 2893 (1989).

Due to the unusual circumstances in which we find ourselves in

this matter, i.e., ruling on a motion for judgment notwithstanding

the verdict in a matter over which we did not preside originally,

we requested submissions by all parties outlining and highlighting

the evidence of RICO violations. Because our review of the

evidence presented at the original trial reveals that plaintiffs

presented evidence of land acquisition activity lasting, at the

longest, approximately one year, we will grant the defendants’

motion for judgment notwithstanding the verdict on the grounds

that such a showing does not meet the Supreme Court’s standard

for establishing a pattern of racketeering as set forth in H.J. Inc.

8la

Appendix C

The standard for granting a motion for judgment N.O.V is

the same as that for a directed verdict. Neville Chemical Co. v.

United Carbide Corp., 422 F.2d 12205, 1210 n. 5 (3d Cir.), cert.

denied, 400 U.S. 826 (1970). See also Wright v. Miller, 9 Federal

Practice & Procedure, § 2537. ‘‘The jury’s verdict will be set aside

only if manifest injustice will result if such verdict is allowed to

stand. To grant such a motion the Court must find as a matter

of law that there can be but one reasonable conclusion as to proper

judgment.’’ Whitmore v. Bobst Group, Inc., 668 F.Supp. 421,

424 (E.D. Pa.1987) (citing Woodward & Dickerson, Inc. v. Yoo

Hoo Beverage Co., 502 F.Supp. 395, 397 (E.D. Pa.1980), aff’d

mem., 661 F.2d 916 (3d Cir.1981)). We must view the evidence

and all inferences thereupon in a light most favorable to plaintiff.

In re Air Crash Disaster at Mannheim, Germany, 769 F.2d 115,

123 (3d Cir.1985), cert. denied 474 U.S. 1082 (1986), reh’g denied,

481 U.S. 1008 (1987).

A. The Racketeering Pattern Requirement

1. The relatedness of the predicate acts.

In H.J. Inc., the Supreme Court held that ‘‘to prove a pattern

of racketeering activity a plaintiff or prosecutor must show that

the racketeering predicates are related, and that they amount to

or pose a threat of continued criminal activity.’’ 109 S.Ct. at 2900

(emphasis in original). In defining whether predicate acts are

‘*related’’ under RICO, the Court sought guidance from a sister

provision of the Organized Crime Control Act of 1970, Pub.L.

91-452, 84 Stat. 922. Looking to Title X of the Act (RICO formed

Title IX), the Court found the following language helpful:

‘*criminal conduct forms a pattern if it embraces criminal acts

that have the same or similar purposes, results, participants,

victims, or methods of commission, or otherwise are interrelated

82a

Appendix C

by distinguishing characteristics and are not isolated events.’’ 109

S.Ct. at 2901 (quoting 18 U.S.C. § 3575(e)).

After reviewing the evidence, we are satisfied that sufficient

evidence was admitted upon which the jury reasonably could have

found that defendants’ conduct toward the plaintiffs had the

purpose and effect of acquiring a right of way for the railroad

.spur and involved the same participants, victims and methods

of commission. This commonality passes muster under the H.J.

Inc. relatedness standard. H.J. Inc., 109 S. Ct. at 2901. See also

Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir.1989) (separate

acts involving separate properties are related for purposes of RICO

when they involve same participants, same methods, common

victim and are not isoliated events).

2. The continuity requirement.

We also must determine that there was evidence that

defendants’ predicate acts extended over a substantial period of

time or that they inherently posed a threat of future criminal

activity. The Court held that to establish a RICO pattern, the

predicates themselves must amount to, or otherwise constitute

a threat of continuing racketeering activity. 109 S.Ct. at 2902.

Proof that a RICO defendant has been involved in multiple

criminal schemes is highly relevant to the inquiry, but not the

only method of showing continuity. /d. at 2901. The Court directed

that we make a case-by-case determination, 109 S.Ct. at 2902,

guided by the following principles:

‘Continuity’ is both a closed-and open-ended

concept, referring either to a closed period of

repeated conduct, or to past conduct that by its

nature projects into the future with a threat of

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Appendix C

repetition .... It is, in either case, centrally a

temporal concept — and particularly so in the

RICO context, where what must be continuous,

RICO’s predicate acts or offenses, and the

relationship these predicates must bear one to

another, are distinct requirements. A party alleging

a RICO violation may demonstrate continuity over

a closed period by proving a series of related

predicates extending over a substantial period of

time. Predicate acts extending over a few weeks

or months and threatening no future criminal

conduct do not satisfy this requirement: Congress

was concerned in RICO with longterm criminal

conduct. Often a RICO action will be brought

before continuity can be established in this way.

In such cases, liability depends on whether the

threat of continuity is demonstrated.

Id. (citations omitted) (emphasis in the original). In essence, the

Court held that before predicates form a RICO pattern, they must

span a substantial period of time or, in the alternative, threaten

long-term criminal activity. /d. at 2902 n.4. Thus plaintiffs’

evidence must have shown predicate acts which extended over

a substantial period of time in excess of a few weeks or months

or which somehow threatened future criminal conduct.

It has been noted that the degree of concrete guidance on

defining continuity offered by the Supreme Court in H.J. Inc.

is debatable. Swistock v. Jones, 884 F.2d 755, 757 (3d Cir.1989).

We are not limited to the text of H.J. Inc. for guidance in this

matter, however. In three subsequent decisions, the Court of

Appeals for this Circuit has interpreted H.J. Inc.’s holding and

has suggested when a period of activity is substantial under RICO.

84a

Apovendix C

In the first case, Swistock v. Jones, 884 F.2d 755 (3d Cir.1989),

the Court reversed the district court’s dismissal of plaintiff’

complaint, finding plaintiffs’ allegations that defendants had

committed numerous predicate acts of wire fraud and mail fraud

for more than two years (i.e., allegations of predicate acts spanning

period of approximately fourteen months combined with allegation

of further misrepresentations approximately one year later) as well

as alleged misrepresentations concerning other potential

transactions in the future with plaintiffs were sufficient to allege

a RICO pattern. /d. at 759.

In a second opinion issued less than one month after Swistock,

the Court of Appeals found that the plaintiff in Shearin v. E.F.

Hutton Group, Inc., 885 F.2d 1162 (3d Cir.1989), had pleaded

a pattern of racketeering when she alleged that three perpetrators

were involved in at least one open-ended scheme which lasted

at least two years and had as its object the defrauding of numerous

investors. /d. at 1166.

Finally, last month in Marshall-Silver Construction Co. Inc.

v. Mendel, slip op., (3d Cir. January 18, 1990), the court held

that the district court properly dismissed a RICO complaint which

alleged predicate acts lasting less than seven months and a scheme

of alleged illegal activity which, on the facts alleged, posed no

threat of additional repeated criminal conduct over a significant

period. Slip op. at 9. The Court of Appeals also cautioned that

while continuity is a temporal concept, the time span is not the

sole consideration. In doing so, the court indicated that in light

of congressional intent behind RICO and the H.J. Inc., holding,

it would look for both temporal continuity as well as a significant

85a

Appendix C

societal threat. Slip op. at 8-9.'

Keeping in mind that continuity is not only a temporal concept

but also is evidenced by a societal threat of future criminal conduct,

we will turn to the evidence at hand.

B. Plaintiffs’ Evidence

In these cases, plaintiffs’. complaints identified the RICO

violation as defendants’ engaging ‘‘in fraudulently forcing

individuals to sell their property for building a railroad for the

purpose of hauling coal. . . .’” E.g., Loughman (83-921) Amended

Complaint 465. Likewise, in the pretrial stipulation plaintiffs’

narrative statement identifies a scheme to acquire plaintiff’s

properties by ‘‘false, fraudulent and coercive means... .”’ Pretrial

Stipulation (Docket #302) at 4.

Racketeering activity is defined at 18 U.S.C. § 1961(1), and

is limited to indictable violations of the federal criminal code.

Such violations are usually referred to as predicate acts in a civil

RICO context. The complaints in these cases alleged violations

of the federal mail and wire fraud statutes, 18 U.S.C. §§ 1341,

1. This cautionary language echoes the court’s opinion in Swistock that

the length of time over which the predicate acts are alleged

to have occurred is relevant, but the fact that the alleged

predicates occurred over a short period is not dispositive... .

Even a closed-ended scheme of short duration, however, could

invoive a ‘distinct threat of long-term racketeering activity,

either implicit or explicit.’

884 F.2d at 757.

86a

Appendix C

1343, as the relevant predicate acts. See Amended Complaint of

Plaintiff Loughman (83-921), 464-65, Amended Complaint of

Plaintiffs Headlee (83-1679) 4473-74, Amended Complaint of

Plaintiffs Hughes (83-1678) 4471-72, Amended Complaint of

Plaintiffs Kent (83-1675) 4471-72, Amended Complaint of

Plaintiffs Morris and Levine (83-1677) 4474-75, Amended

Complaint of Plaintiffs McIntyre (83-1676) 4478-79, Amended

Complaint of Plaintiff Estate of John Throckmorton (83-1754)

4472-73, Amended Complaint of Plaintiffs Yesenosky (83-1674)

4972-73.

The mail fraud statute provides criminal penalties for devising

‘“‘any scheme or artifice to defraud or for obtaining money or

property by means of false or fraudulent pretenses, representations,

or promises.’’ 18 U.S.C. § 1341. The essential elements necessary

to establish a violation of Section 1341 are:

1. A scheme or artifice to defraud or to obtain

money by false or fraudulent pretenses,

representations, Or promises;

2. knowing and willful participation in the scheme

or artifice by the defendant, with knowledge of

its fraudulent nature and with specific intent to

defraud; and

3. the use of the mails in furtherance of the

7 fraudulent scheme.

United States v. Maze, 414 U.S. 395, 398-99 (1974). Similarly,

the wire fraud statute proscribes use of the wires with intent to

defraud. See 18 U.S.C. § 1343. To bring a private action under

Section 1964(c) of RICO, a plaintiff need not show that the

87a

Appendix C

defendant has already been convicted of a predicate act, but

plaintiff must make a showing that defendant has committed an

indictable act. Sedima, S.P.R.L. v. Imrex Co.1, 473 U.S. 479,

481-82 (1985).

With our focus on the scheme alleged in the pretrial papers,

we will first address plaintiffs’ argument that the jury could have

reasonably concluded that a scheme to defraud the plaintiffs arose

in or about 1978 on the basis of a letter written by defendant

Ewin

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