UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF PENNSYLVANIA 

_________________________________________________ 

 │

LEXINGTON INSURANCE COMPANY, │Civil Action No. 02-CV-4435 

 │ (Hon. Anita B. Brody)

 Plaintiff, │

 │

 - against – │

 │

DAVID FORREST, T. BEAUCLERC ROGERS IV, │

STANLEY MUNSON, MARTIN FINK, all individually, │

and NEW BEGINNINGS ENTERPRISES LLC, a │

California Limited Liability Company, and │

TARLO LYONS, a partnership, │

 │

 Defendants. │

________________________________________________│

REPLY MEMORANDUM OF LAW OF 

DEFENDANT STANLEY MUNSON IN SUPPORT OF 

HIS MOTION FOR JUDGMENT ON THE PLEADINGS 

PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(C)

Defendant Stanley Munson respectfully submits this memorandum in reply to the 

brief of plaintiff Lexington Insurance Co. in opposition to Tarlo Lyons’s motion for judgment on 

the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. 

Lexington’s brief fails to address the fatal pleading deficiencies of Lexington’s Second 

Amended and Supplemental Complaint as pointed out by Munson’s and Tarlo Lyons Motions to 

Dismiss under Fed. R. Civ. P. 12(c), and only confirms that Complaint must be dismissed with 

prejudice as to Munson as a matter of law, for at least the following reasons: 

Case 2:02-cv-04435-AB Document 140 Filed 02/16/2005 Page 1 of 18
A. Statute of Limitations

All of Lexington’s claims, under both state law and civil RICO, must be dismissed as to 

Munson under the applicable statutes of limitations. 

1. State Law Claims 

Lexington’s Counts 4 (common law fraud), 5 (tortious interference with contract), 6 

(fraudulent inducement), and 7 (tortious interference with contract), all sound solely in state law. 

Pennsylvania’s Uniform Statute of Limitations on Foreign Claims Act applies the shorter

of the foreign limitations period or the applicable Pennsylvania statute of limitations. 42 Pa. 

Cons. Stat. Ann. J.A. § 5521. The Pennsylvania statute of limitations for common law fraud 

(Count 4) and fraudulent inducement (Count 6) is two years. 42 Pa. Cons. Stat. Ann. § 5524(7). 

The Pennsylvania statute of limitations for tortious interference with contract (Counts 5 and 7) is 

two years. 42 Pa. Cons. Stat. Ann. § 5524(3). 

Lexington first filed against Munson on April 29, 2004. Thus, all of Lexington’s state law 

claims are barred if they accrued before April 29, 2002. 

The latest underlying act alleged in Lexington’s operative Complaint ended by December 

9, 1999. (¶33(c)). 

Lexington only alleges equitable tolling against “Forrest and Rogers,” not against 

Munson. (¶¶93-95). It only alleges “Forrest and Rogers” alleged “efforts to cover up” continued 

until “February 2001.” (¶33(f)(iv)). Lexington admits it exercised audit rights as of August 2000 

(¶94), was granted access to books and records by November 2000 (¶95), and had obtained an 

injunction in English courts against Flashpoint entities by January 19, 2001 (¶¶15, 36). 

Lexington’s reply brief states no more than “the misconduct at issue ... could not have 

been discovered by Plaintiff until after November 2000, at the very earliest.” (p. 22). It implicitly 

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concedes completion of activity, injury, and discovery on or before that date. It offers nothing 

establish accrual of any of the state law causes of action on or after April 29, 2002. 

Also, to its prejudice, in its initial Complaint against Forrest and Rogers in this action, 

filed on July 23, 2002, Lexington named, but did not join, Munson, with essentially the same

allegations it now asserts. It is thus appears of record that Lexington had discovered its potential 

claims by that date. This creates a record where Lexington’s only hope of saving the state law 

claims would be to show it first discovered them in the narrow window of a few months between 

April 29, 2002 and July 23, 2002. Fatal to those claims, Lexington has made no such allegations 

or showing. 

Hence, Lexington’s Complaint and reply brief have effectively waived Lexington’s state 

law claims as to Munson. Lexington has failed to allege any basis to show these claims accrued 

before the statute of limitations date of April 29, 2002. Hence, all of Lexington’s state law claims

against Munson – Counts 4, 5, 6, and 7 – must be dismissed with prejudice. 

2. Civil RICO Claims 

Lexington’s Count 1 (substantive civil RICO under 1962(c)) and Count 3 (conspiracy 

under 1962(d)) assert civil RICO claims against Munson. 

“Injury-discovery” governs accrual of civil RICO claims under a four-year statute of 

limitations. Forbes v. Eagleson, 228 F.3d 471, 484 (3d Cir. 2000). Under this principle, “a RICO 

claim accrues when ‘plaintiffs knew or should have known of their injury.’” Mathews v. Kidder, 

Peabody & Co., 260 F.3d 239, 250-51 (3d Cir. 2001). A plaintiff need only be able to discover 

the “injury,” and its “potential source.” It essentially must be on “inquiry notice.” Id. at 252. The 

“should have known” element has both an objective – reasonableness – and subjective – 

characteristics of the individual plaintiff – element. It also considers the circumstances – such as 

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sources of information available to the plaintiff. The “injury” to be the discovered is that alleged 

by plaintiff. The statute of limitations also accrues when the plaintiff knew, or should have 

known, of “storm warnings,” either individual signals or cumulative signals that the investment 

is threatened, or of a different character than contemplated by plaintiff. Id. at 252. 

Since Lexington first filed against Munson on April 29, 2004, all of Lexington’s civil 

RICO claims are barred if Lexington discovered, or should have discovered, any of the “injuries” 

it now alleges, or any “storm warnings” before April 29, 2000. 

The “injuries” that Lexington now alleges – at least as to “misappropriation,” the only 

charges involving Munson (Complaint, ¶35) – occurred as early as July 1998 through December 

1999. (Lex. Brief at 14).1

 Many or most could have been discovered by reviewing a single bank 

statement. They are, in chronological order: “Commingling” funds in a single account, as of July 

6, 1998 and after. (¶32); A “transfer” to the Building LLC on August 14, 1998. (¶33(c); 

“Invest[ments]” in Russian movie theaters “during 1998 and/or 1999.” (¶33(d)); Another 

“transfer” to the Building LLC on April 7, 1999 (¶33(c)); “Transfers” to Ice Storm from August 

12, 1999 to December 9, 1999 (¶33(e)). Allegedly, “all of these funds so used were transferred 

from the Flashpoint account that contained the (improperly commingled) funds that were raised 

in the various Hollywood Funding financings.” (¶¶33(c), (d), (e)). (Lex. Brief at 14). 

 

1

 No concession is being made or implied that such alleged “commingling” or “transfers” are 

adequate or even competent bases of any potential mail fraud, wire fraud, tort, or even contractual 

breach, or that they actually proximately or remotely caused any recoverable injury or damage to

Lexington. Indeed, Munson contends the opposite. However, Lexington cannot have it both ways. 

In the context of its claim, Lexington alleges these events of “commingling” and “transfer” to be 

“injuries.” (¶¶32, 33, etc.; Lex. Brief at 14). They must thus be treated as such for purposes of the 

“injury-discovery” rule for the civil RICO statute of limitations, such that Lexington’s civil RICO 

claim based on them must be dismissed if Lexington did, or should have, discovered one or more 

of these “injuries” before April 29, 2000. 

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“Storm warning” events acknowledged by Lexington include at least the allegation that 

“Flashpoint ran out of money” as of November 1999. (¶33(f)). 

Lexington has carefully refrained from admitting, in so many words, that it actually 

discovered these alleged “injuries” or storm warnings before April 29, 2000. 

Thus, the question before the court is whether Lexington has admitted to facts and 

circumstances from which the court can infer, as a matter of law, that Lexington’s Complaint and 

Brief show either (1) it “knew” of facts which constitute sufficient “storm warnings” to put it on 

“inquiry notice,” or (2) “should have known” in the exercise of reasonable prudence under the 

facts and circumstances before the court of its alleged “injuries” or “storm warnings,” before 

April 29, 2000. 

Lexington’s character as a corporate insurer, capable of conducting international 

transactions, investigation, and litigation simultaneously spanning from California, through 

Pennsylvania, New York, and to the United Kingdom is before the court as a matter of record. 

(E.g. Affidavits of Krugman; Opinions of Justice Rix; Complaint ¶¶15, 36, passim). 

Lexington’s insured risk of over $180 million through Hollywood Funding 4, 5, and 6, 

bears upon what constitutes “reasonable” inquiry as a matter of law. (¶4). 

Lexington specifically refers to and quotes the Collateral Agreements in its Complaint. 

(e.g. ¶35). Thus, the text of such agreements is before the court on this Motion to Dismiss. Lum 

v. Bank of America, 361 F.3d 217, 222 n. 3 (3d Cir. 2004). Lexington has also chosen to supply 

additional Collateral Agreement documents with the Affidavit to its brief. 

The Collateral Agreements, paragraph 4(9), provided to Lexington “monthly” access to 

(1) bank statements; (2) reconciliation reports; and (3) other details of Flashpoint’s accounts 

which it alleges were “commingled,” and to the identities of the payees to whom such funds 

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Case 2:02-cv-04435-AB Document 140 Filed 02/16/2005 Page 5 of 18
were “transferred,” starting in July 1998 (¶4; Hollywood Funding 4 (Jules Verne) Collateral 

Agreement), as follows: 

5. Management of Accounts 

(9) Flashpoint agrees to provide to Lexington (on a monthly 

basis) [1] copies of all bank statements in relation to the [a] 

Holding Account, [b] Flashpoint Jersey Holding Account, [c] 

Production Account, [d] Collection Account, [e] Flashpoint UK 

Collection Account and [f] Escrow Account, together with [2] a 

breakdown and reconciliation of [a] monies paid and received, [b] 

the payee/payer (as the case may be), and [c] brief details of the 

reason for the payment or receipt, and [3] agrees to provide such 

other information in relation to the accounts as Lexington may 

reasonably require. 

(internal bracketed [] numbering added). 

Thus, at least as of August or September 1998, Lexington had a contractual right to 

copies of the bank statements for both the Flashpoint UK and the Flashpoint Jersey “Holding 

Accounts” into which it now alleges “all funds” were “commingled.” (¶¶33(c), (d), (e)). (Lex. 

Brief at 14). One look at any month’s bank’s statement – even without any reports from 

Flashpoint – would reveal the alleged “commingling.” The first bank statement as of September 

1998 would almost certainly show the alleged “transfer” to the Building LLC on August 14, 

1998. which Lexington now alleges to be an “injury” (¶33(c)). 

Nor could there be any question about “potential sources” since Flashpoint’s principals, 

bank accounts, and solicitors, such as the Tarlo Lyons firm, and one of the individual solicitors 

with whom Lexington’s counsel had negotiated, Munson, were known to Lexington, and 

identified largely on the face of the Collateral Agreements. 

Lexington now alleges it never received any of the monthly bank statements, monthly 

reconciliation reports, or other monthly information from Flashpoint. (Lex. Brief at 20-21). It 

does not deny that the absence of such reports was a “storm warning” under Third Circuit 

precedent. 

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Lexington contends that it failed to assign even one clerk, with minimal training, to 

request and check the bank statements and reports for “commingling” or “transfers,” and instead 

relied on the purported fiduciary duty created by a reference to “utmost good faith” in the 

Collateral Agreements. (Lex. Brief at 10). 

It is well-established that a mere reference to fiduciary duties, agency, or utmost good 

faith in a contract does not overcome the character of a transaction as shown by the contractual 

terms as a whole. See, e.g., PXRE Reinsurance Co. v. Lumberman’s Mutual Casualty Ins. Co., 

330 F.Supp.2d 981 (N.D. Ill. 2004) (reference to "utmost good faith" did not somehow override 

the nature of the transaction and of the parties' relationship); Waverly Productions v. RKO 

General, 32 Cal.Rptr. 73 (Cal. Ct App. 1963) (limited fiduciary relationship between motion 

picture producer and distributor with respect to accounting for the rental money received was one 

"of a strictly contractual obligation," and no other fiduciary relationship between the parties 

existed). Moreover, Munson is not personally a party to the transaction, but was the solicitor for 

Flashpoint. The terms regarding good faith undoubtedly had some contractual significance, 

imposing obligations on both Lexington and Flashpoint. But, it is beyond reasonable inference or 

any fair reading of the documents for Lexington to suggest that the references to agency, risk 

management, or mutual good faith, somehow relieve Lexington of all duties of reasonableness 

and due diligence applicable to a civil RICO claim. 

Thus, Lexington’s case requires the court to find that it is reasonable for a corporate 

insurer with global reach, and over $180 million at risk, to never once check, over a period of 21 

months, for bank statements, reconciliations, or reports to which it had a contractual right – and 

which would have shown instantly on the face of almost any one of them either the 

“commingling” or “transfers” it now alleges to be “injuries” – and for a period of at least 6 

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months would show other “storm warnings” (“out of money”); and then, over four years later to 

subject the court system and multiple parties to a civil RICO action based largely, exclusively in 

the case of Munson (Complaint, ¶¶ 35, 73), on those readily discoverable “transfers” and that 

“commingling,” which the insurer plaintiff chose to ignore at the time of the events. 

In short, Lexington’s Complaint, its Brief, and the Collateral Agreement – the record

properly before the court on this Motion to Dismiss – show a set of circumstances in which 

Lexington had sufficient storm warnings, sophistication, and rights of access to be upon at least 

“inquiry notice” of its alleged “injury” – that the funds underlying its risk were not being 

deposited and withdrawn as Lexington now alleges they should have been – well before the 

statute of limitations trigger date of April 29, 2000, so that its civil RICO claim against Munson 

is barred in its entirety by the statute of limitations, and thus must be dismissed with prejudice. 

3. No Equitable Tolling

Lexington alleges it "could not with the exercise of reasonable due diligence" have 

discovered "defendants' criminal conduct" until some time after November 2000 "because the 

frauds and other misconduct were inherently self-concealing." (¶93). It contends that “Forrest 

and Rogers” engaged in “a cover up” lasting until February 2001. (¶33(f)). It alleges a series of 

events involving assertion of its audit rights in August 2000, until an injunction issued by the 

English courts on January 19, 2001. (¶¶93-95). 

None of these allegations establish equitable tolling; and they especially fail as to 

Munson. 

 In Merritt v. Blaine, the Court of Appeals for the Third Circuit reiterated the two general 

requirements for equitable tolling: (1) that the petitioner has in some extraordinary way been 

prevented from asserting his or her rights; and (2) that the petitioner has shown that he or she 

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exercised reasonable diligence in investigating and bringing [the] claims. See Merritt v. Blaine, 

326 F.3d 157, 168 (3d Cir.), cert. denied, 540 U.S. 921 (2003). Moreover, “[t]he law is clear that 

courts must be sparing in their use of equitable tolling.” Seitzinger v. Reading Hosp. & Med. 

Ctr., 165 F.3d 236, 239 (3d Cir. 1999).

Here, the gravamen of the claim against Munson is not at all “self-concealing.” (¶93). – 

The alleged “commingling” or “transfers” in derogation of the Collateral Agreements (¶35) 

would have been apparent on any of the bank statements, or reports, or both to which Lexington 

had a contractual right under the Collateral Agreements. 

Second, Lexington has not alleged any concealing conduct by Munson individually, and 

certainly no “extraordinary” prevention as required by the law of equitable tolling. 

Third, Lexington has not alleged nor shown “reasonable diligence” on its part in the time

from July 1998 through April 29, 2000. 

Finally, as noted in the preceding section, the absence of monthly and other reports 

themselves, under the circumstances of record, constituted a “storm warning” in itself sufficient 

to create “inquiry notice” to Lexington before the statute of limitations date of April 29, 2000. 

Consequently, no equitable tolling applies. All of Lexington’s civil RICO claims as to

Munson are barred by the statute of limitations, and must be dismissed with prejudice. 

B. No Reliance

Where a plaintiff has access to reports that on their face can reveal the very facts that the 

plaintiff has claimed the defendant misrepresented, such a plaintiff cannot properly claim it has 

“relied” on the defendants statements, nor can it claim any such alleged reliance was 

“reasonable” or “justifiable,” and thus its civil RICO claim must fail for lack of the essential 

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element of reliance. Ideal Diary Farmers v. John Labatt, Ltd., 90 F.3d 737, 746-47 (3d Cir. 

1996). See also, Moore v. Paine Webber, Inc., 189 F.3d 165, 169-73 (2d Cir. 1999). 

Here, the terms of the Collateral Agreements obtained by Lexington starting in July 1998 

– with its detailed reporting requirements, rights to monthly copies of bank statements for all 

accounts, monthly reconciliation reports, annual budgets and forecasts, audited annual reports, 

and any other such information Lexington might request – shows that Lexington did not, in fact, 

“rely” upon the alleged statements of Munson while “negotiating” the later Collateral 

Agreements (¶38-40), nor upon Munson’s signatures on the drawdown certificates for the one 

account (the Flashpoint UK Holding Account) to which the “Tarlo Lyons representations” 

applied (see, Collateral Agreements), with regard to determining whether the funds were 

“commingled” or to whom the funds were “transferred.” (See Collateral Agreements, §§ 5(9), 

7(i), etc.). 

Lexington contends in its brief that it “relied” exclusively on the alleged fiduciary nature 

of the relationship, created by the “utmost good faith” reference as to Flashpoint in the Collateral 

Agreements. (Lex. Brief at 10). 

The overall structure of the Collateral Agreements shows that there was in fact no 

fiduciary relationship between Flashpoint and Lexington. Moreover, it is clear that the Tarlo 

Lyons firm, of which Munson was a contract partner, was counsel for Flashpoint. 

Munson asserts that there were no misrepresentations or contractual breaches on his part. 

Yet, even if statements were made and acts done as alleged by Lexington, Lexington’s has 

shown no “justifiable” basis for its alleged “reliance” with respect to the matters of which it 

complains – “commingling” of bank accounts (¶32-33) and “transfers” to certain payees from

those accounts (¶32-33). Even giving Lexington the benefit of all reasonable inferences, as we 

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must, reliance cannot be reasonable, where, as here, like the plaintiff in Ideal Dairy, Lexington 

had a contemporaneous right to written reports from independent third parties – the banks – that 

would show unequivocally the factual situation, or not, about which Lexington now claims it 

“relied.” 

In short, the terms Lexington insisted upon in the Collateral Agreements of record show 

that Lexington did not in fact “rely” upon Munson. Moreover, if Lexington insisted upon 

obtaining those contractual terms, then ignored them completely, as it now claims in its brief, 

any reliance Lexington placed cannot be considered “reasonable” nor “justifiable” as a matter of 

law. 

Thus, for either or both reasons, the essential element of “reliance” is lacking as a matter 

of law on the face of the Complaint and the record properly before the court on this Motion to

Dismiss, and thus Lexington’s civil RICO claims as to Munson must now be dismissed with 

prejudice. 

C. No Proximate Cause

Lexington, with its brief and affidavit, has submitted drawdown certificates from April 

and May 1998, presumably during the time of Hollywood Funding 1-3 insured by HIH Casualty 

(¶4), directing payments for the Regent slate of films, which was part of the Hollywood Funding 

5 of August 1998 insured by Lexington. 

These add nothing to Lexington’s case. 

Lexington seems to argue that such “advance” payments from Hollywood Funding 1-3 in 

April and May 1998 to Regent, would need to be “refunded” to Hollywood Funding 1-3 projects 

sometime after August 1998 out of moneys from Hollywood Funding 5; and thus that Lexington 

was somehow “injured” by those advance payments; and that somehow Munson 

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“misrepresented” matters by not revealing such advances during negotiations of Hollywood 

Funding 4-5. 

If there is any “injury” to Lexington from such a convoluted chain of supposed 

obligations and purported duties or plans to refund, it is certainly not sufficiently “proximate” to 

be considered by the law. If the payments injured anyone, and anyone had standing to sue, it 

would be HIH, not Lexington. Such expenditures did not and do not “proximately” cause any 

injury to Lexington, and thus cannot be considered with regard to its civil RICO claims. See, 

Holmes v SIPC, 503 U.S. 258 (1992); Callahan v. A.E.V., Inc., 182 F.3d 237 (3d Cir. 1999). 

D. No Stolen Funds

Lexington asserts transportation of stolen moneys, 18 U.S.C. §2314, as a potential alleged 

predicate act. (Lex. Brief at 20). 

Yet, the face of the record, particularly the Collateral Agreements, shows that the moneys 

in the downward flow of funds – from the Flashpoint Jersey Holding Account, to the (various) 

Flashpoint UK Holding Accounts, to the (various) Production Accounts – was all of funds 

owned by Flashpoint. 

This situation is unlike the “trust” imposed by the Collateral Agreements upon the 

upward flow of funds – from the Collection Accounts, to the Escrow Accounts. But, Lexington’s 

Complaint is not about these accounts. 

All of Lexington’s allegations regarding Munson involve the downward flow of funds 

and the Holding Accounts – including the allegations of “commingling,” “transfers,” 

“misappropriation” (¶¶33, 77), or Munson’s alleged statements during negotiations about 

compliance or breach of prior agreements. (¶¶38-40). 

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Thus, none of the moneys in question can be considered “stolen” from the face of the 

record, and thus any claims based upon 18 U.S.C. §2314 as a predicate act must be dismissed. 

E. No Fraud

Contract-based theories do not state tort claims, and thus do not provide a basis for fraud 

claims. Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002); Etoll v. Elias/Savion

Advertising, Inc., 2002 PA Super 347, 811 A.2d 10 (2002). 

The source of all restrictions alleged by Lexington – whether upon which bank accounts 

Flashpoint moneys could be deposited, or as to which payees or purposes they could be 

transferred, as to who should sign drawdowns for which accounts – is purely contractual. It is 

fatal to Lexington’s claims both that Munson is not himself a party to a contracts, and that the 

source of alleged restrictions is purely contractual. 

The sources of alleged restrictions before July 1998 are the inchoate Collateral 

Agreements as to the Hollywood Funding 1-3 transactions insured by HIH, which specific 

agreements Lexington admits did not then exist, but asserts had “parallel requirements” in 

“earlier” unspecified “agreements.” (¶¶38-40). Whatever these alleged terms were, they are at 

most contractual. 

From July 6, 1998 to December 1998, the Hollywood Funding 4 (Jules Verne) Collateral 

Agreement came into effect. Other Collateral Agreements were allegedly entered on or before 

December 16, 1998. 

Lexington alleges that Munson knew his client Flashpoint was breaching certain terms of 

earlier agreements when negotiating later agreements. (¶¶38-40, 77). 

The cited cases establish that all contractual representations and warranties do not fall 

within the scope of criminal fraud statutes. There is a difference between inducing statements on 

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such subjects as capacity – stating that a client is a corporation, or has means to perform, when 

such is not at all the case – and statements as here about the inner economic workings of 

contractual performance – which accounts will hold funds, which projects are being pursued. It is 

no crime to place funds in one bank account versus another, or to fund one film project versus 

another. 

Lexington’s entire argument demonstrates that its fraud claims here are not simply 

“intertwined” with the Collateral Agreements – no foundation is alleged for them except 

inchoate or existing Collateral Agreements. In these circumstances, no claim can be stated under 

RICO with a mail or wire fraud predicate. United States v. Handakas, 286 F.3d 92 106-07 (2d 

Cir. 2002); United States v. Chandler, 376 F.3d 1303, 1312-14, on rehearing, 388 F.3d 796 (11th 

Cir. 2004). 

These principles require dismissal of Lexington’s alleged predicate acts, even if the 

Collateral Agreements said what Lexington contends, which, as pointed out in Munson’s Motion 

to Dismiss, they do not. Rather, Lexington’s allegations, at minimum, require recasting the 

Collateral Agreements to apply to persons not parties, to apply the so-called “Tarlo Lyons 

representation’ applicable only the Flashpoint (UK) Holding Accounts to other accounts to 

which it did not apply, and other modifications of terms. (See Lex. Brief at 8) (attributing to 

Collateral Agreements terms that only exist as part of Lexington’s current allegations). 

Consequently, Lexington has failed to allege legally adequate predicate acts, and its Complaint 

as to Munson must be dismissed with prejudice for this reason as well. 

F. Conclusion

For all of the above reasons, and the reasons stated in Munson’s Motion to Dismiss under 

Fed. R. Civ. P. 12 (c), all claims as to Munson must be dismissed with prejudice. 

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Lexington’s brief in response to that motion has done nothing to cure the fatal 

deficiencies of Lexington’s Second Amended and Supplemental Complaint filed April 29, 2004. 

All of Lexington’s state law claims – Counts 4, 5, 6, and 7 – accrued before April 29, 2002, and 

thus are barred by the two-year statute of limitations. Lexington’s civil RICO claims – Counts 1 

and 3 – are such that Lexington must be deemed to have discovered its alleged injury, or 

sufficient storm warnings, prior to April 29, 2000, and thus they are barred by the four-year 

statute of limitations. No actual or justifiable reliance by Lexington can exist given the terms of 

the Collateral Agreements. No proximate cause exists between early-dated drawdown certificates 

Lexington has submitted and any injury to Lexington. No predicate acts have been established or 

adequately alleged. There is no stolen property. Contractual restrictions alone as alleged by 

Lexington do not support mail fraud or wire fraud claims. The other reasons for dismissal stated 

in Munson’s original motion remain valid. 

Accordingly, the motion for judgment on the pleadings pursuant to Rule 12(c) of the 

Federal Rules of Civil Procedure should be granted, and all claims against Defendant, Stanley 

Munson, should be dismissed with prejudice. 

Respectfully submitted, 

BY: /s/ Conrad O. Kattner

CONRAD O. KATTNER, ESQ. 

Identification No: 035468 

MCSHEA & TECCE, P.C. 

1735 Market Street, 16th Floor 

Philadelphia, PA 19103 

 (215) 599-0800 

Counsel for Defendant, 

 Stanley Munson 

Date: _February 16, 2005_____ 

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Case 2:02-cv-04435-AB Document 140 Filed 02/16/2005 Page 15 of 18
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

LEXINGTON INSURANCE COMPANY CIVIL ACTION 

Plaintiff

v. NO. 02-4435 

DAVID FORREST, 

T BEAUCLERC ROGERS IV, 

STANLEY MUNSON, 

MARTY FINK, 

NEW BEGINNINGS ENTERPRISES LLC, 

and TARLO LYONS 

Defendants

CERTIFICATE OF SERVICE 

Conrad Kattner, Esquire, attorney for Defendant, Stanley Munson, hereby certify 

that I have caused copies of the foregoing: 

REPLY MEMORANDUM OF LAW OF 

DEFENDANT STANLEY MUNSON IN SUPPORT OF 

HIS MOTION FOR JUDGMENT ON THE PLEADINGS 

PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(C) 

to be served electronically, and by any additional means shown, upon the following 

parties or their counsel of record on the date below: 

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Case 2:02-cv-04435-AB Document 140 Filed 02/16/2005 Page 16 of 18
Glenn F. Rosenblum, Esquire 

Jeffrey R. Lerman, Esquire 

Montgomery, McCraken, Walker & 

Rhoads 

123 South Broad Street 

Philadelphia, PA 19 109 

and 

Edward P. Krugman, Esquire 

Emily A. Poler, Esquire 

Ira J. Dembrow, Esquire

Scott M. Mory, Esquire 

Cahill Gordon & Reindel 

80 Pine Street 

New York, NY 10005 

Counsel for Plaintiff 

Alexander Kerr, Esquire 

Stephen P. McFate 

McCarter & English, LLP 

Mellon Bank Center 

1735 Market Street, Suite 700 

Philadelphia, PA 19 103 

and 

Beverly Y. Lu, Esquire 

Charles A. Adamek 

Lord Bissell & Brook, LLP 

300 South Grand Avenue, Suite 800 

Los Angeles, CA 9007 1 

Counsel for New Beginnings Enterprises 

Edward M. Dunham, Jr., Esquire 

Shannon Hampton Sutherland, Esquire 

Duane Morris LLP 

One Liberty Place 

Philadelphia, PA 19 103 

Counsel for David Forrest 

John D. Gordan, IIII 

Eugene F. Bannigan 

John N. Thomas 

10 1 Park Avenue 

New York, NY 10 178 

Thomas M. Kittredge 

Kenneth L. Racowski 

170 1 Market Street 

Philadelphia, PA 19 103 

Counsel for Tarlo Lyons 

Nicholas M. Centrella, Esquire 

James J. Rohn, Esquire 

Kevin Dooley Kent, Esquire 

Conrad OYBrien Gellman & Rohn, PC 

1 5 1 5 Market Street, 1 6th Floor 

Philadelphia, PA 19 102 

Counsel for T. Beauclerc Rogers, IV

 2

Case 2:02-cv-04435-AB Document 140 Filed 02/16/2005 Page 17 of 18
Neil G. Epstein, Esquire 

Eckert Seamans Cherin & Mellott, LLC 

15 15 Market Street 

Ninth Floor 

Philadelphia, PA 19 102 

and 

Jeffrey D. Farrow, Esquire 

Mona Z. Hanna, Esquire 

Sanford Louis Michelman, Esquire 

Michelman & Robinson LLP 

4 Hutton Centre, Suite 300 

Santa h a , CA 92707 

Counsel for Martin Fink 

Respectfully submitted, 

BY: /s/ Conrad O. Kattner

CONRAD O. KATTNER, ESQ. 

Identification No: 035468 

MCSHEA & TECCE, P.C. 

1735 Market Street, 16th Floor 

Philadelphia, PA 19103 

 (215) 599-0800 

Attorney for Defendant, 

 Stanley Munson 

Date: ___February 16, 2005______ 

 3

Case 2:02-cv-04435-AB Document 140 Filed 02/16/2005 Page 18 of 18