Opinion ID: 765593
Heading Depth: 3
Heading Rank: 2

Heading: Counts VII and VIII -- Common Law Fraud and Conspiracy

Text: 30 Counts VII and VIII of RTC's Third Amended Complaint assert claims for common law fraud and civil conspiracy, respectively. To prevail on its fraud claim, RTC must demonstrate that: (1) Keating made misrepresentations of material fact; (2) he knew the representations were false; (3) he intended to defraud Lincoln; (4) Lincoln actually and reasonably relied on the misrepresentations; and (5) Lincoln was damaged. See, e.g., Home Budget Loans, Inc. v. Jacoby & Meyers Law Offices, 255 Cal. Rptr. 483, 487 (Cal. Ct. App. 1989); Rice v. Tissaw, 112 P.2d 866, 868 (Ariz. 1941). The RTC grounds its civil conspiracy claim on the same factual predicate as its fraud claim. The civil conspiracy claim has one additional element -- that Keating agreed to or acted in concert with others to defraud Lincoln. 5 B.E. Witkin, Summary of California Law S 44 (9th ed. 1988); see also McElhanon v. Hing, 728 P.2d 256, 262 (Ariz. Ct. App. 1985), aff'd in part, vacated in part, 728 P.2d 273 (Ariz. 1986). 31 The district court granted RTC's motion for summary judgment on both claims on the basis of the Shields litigation. Specifically, the district court relied on the following factual findings: 32 The prices of American Continental securities were artificially inflated throughout the Class Period by false and misleading statements and financial reports. 33 American Continental violated federal banking regulations governing direct investments and affiliated transactions. 34 American Continental engaged in a scheme to upstream dollars from Lincoln to American Conti nental through an illegal tax sharing agreement. 35 The American Continental tax sharing agreement was designed to funnel money up to American Con tinental from Lincoln. 36 Shields at 11-12. 37 Application of the Kamilche factors indicates that those findings are not identical to the issues raised by the RTC's fraud and civil conspiracy claims. The RTC grounds its claims in the instant case on misrepresentations made to Lincoln and Lincoln's justifiable reliance on those misrepresentations. Those issues were not determined in Shields. In Shields the American Continental bondholders argued that they actually and reasonably relied on misrepresentations made in American Continental's annual and quarterly reports. 4 The RTC does not assert that Lincoln was misled into investing in American Continental, but rather the RTC alleges that misrepresentations were made to Lincoln unrelated to any investment in American Continental and that Lincoln reasonably relied on those misrepresentations. Because the evidence necessary to prove these two issues differ significantly, the Shield findings cannot support the application of issue preclusion. See Kamilche, 53 F.3d at 1062.