Submitted: February 12, 2018
Parties' Cross Motions for Summary Judgment: Denied
J. Cleary, Esquire, of the STATE OF DELAWARE DEPARTMENT OF
JUSTICE, Wilmington, Delaware, Attorney for Plaintiff.
T.N. Jordan, Esquire, of JORDAN LAW, LLC, Wilmington,
Delaware, Attorney for Defendant.
M. LeGrow, Judge
State has brought a civil racketeering claim against Da Zhong
Wang for allegedly operating a prostitution ring in Delaware.
The complaint lists four predicate acts, including three acts
of prostitution by Defendant's former employees over the
course of approximately twelve and a half months. Although
multiple material issues of fact remain, both parties seek
summary judgment, while simultaneously arguing disputed facts
preclude the opposing party's motion.
primary issues the parties raise are whether the undisputed
facts require judgment as a matter of law against Defendant,
or whether the State's case fails on its face on the
required elements of continuity and relatedness. Contrary to
the requirements of Rule 56, each party asks the Court to
make inferences and view the facts in the light most
favorable to the moving party. The Court,
however, cannot depart from Rule 56. When viewing the facts
in light most favorable to the nonmoving party, both
motions must be denied because the resolution of these claims
will depend on the fact finder's resolution of material
factual disputes. Accordingly, both motions for summary
judgment are DENIED.
AND PROCEDURAL BACKGROUND
facts are drawn from the complaint and the record the parties
provided with their briefs. Mr. Wang ("Defendant")
is a Chinese citizen who formerly operated a chain of massage
parlors in Delaware. These parlors included, among other
locations, Relaxed Spa in Rehoboth Beach (the "Rehoboth
Beach location"), Massage Center in Middletown (the
"Middletown location"), and Da Wang's Bodyworks
in Dover (the "Dover location").
November 18, 2013, an undercover Delaware State Police
Trooper purchased a massage at the Middletown location.
During the massage, the masseuse, Chunyan Li ("Ms.
Li"), solicited the Trooper for an act of prostitution.
When the Trooper searched the building, he found evidence
that someone lived on the premises. Ms. Li was charged with
prostitution, but the charge later was dismissed.
January 9, 2014, another undercover Trooper purchased a
massage at the Middletown location. The masseuse, Ms. Xiu
Juan Zhang ("Ms. Juan Zhang") solicited the Trooper
for a sexual act during the massage. Ms. Juan Zhang was
charged with prostitution, but the charge was dismissed.
Later, an investigator with the Division of Professional
Regulation encountered Ms. Juan Zhang at the Dover location.
When the investigator showed Ms. Juan Zhang a picture of
Defendant, she identified him as "boss."
April 2014, the City of Dover Public Works investigated a
clog in the sewer pipes at the Dover location. The Public
Works employees discovered that a bag of used condoms caused
the blockage. In December 2014, Public Works employees again
discovered a bag of used condoms and other detritus was
blocking the sewer line. Police investigated the Dover
location and interviewed Ms. Juan Zhang and Shuquing Wang.
Police discovered a functioning kitchen and bedroom with a
sofa, blanket, and pillow at the premises. The police
interviewed Mr. Wang regarding the issues at the Dover
location. Mr. Wang represented Ms. Juan Zhang was his former
employee, but that he fired her after her prostitution
charge. When asked why a former employee appeared to be
living at the Dover location, Mr. Wang would not answer. Ms.
Juan Zhang also was Mr. Wang's ex-wife, but he did not
indicate that was why she lived at the Dover location.
separate incident, on December 4, 2014, an undercover Trooper
purchased a massage at the Rehoboth Beach location. Again,
the masseuse, Ms. Meizhu Zhang, solicited the Trooper for a
sexual act during the massage. In addition, the Trooper found
evidence that someone lived on the premises. Ms. Meizhu Zhang
pleaded guilty to prostitution in the Court of Common Pleas
of Sussex County on December 11, 2014. Mr. Wang was charged
with promoting prostitution and permitting prostitution
relating to the Rehoboth Beach location. He pleaded guilty to
permitting prostitution on April 19, 2015, and the State in
return dismissed the promoting prostitution charge.
April 7, 2015, the Board of Massage and Bodywork ("the
Board") held a hearing to consider evidence regarding
complaints filed by the State against Mr. Wang. Despite
receiving notice of the hearing, Mr. Wang did not attend. On
June 5, 2015, the Board entered a final order suspending Mr.
Wang's professional license and imposing $2, 000 in civil
penalties. On May 13, 2016, the State filed the complaint in
this case. Both parties filed motions for summary judgment.
summary judgment motion, the State argues generally that no
issues of material fact remain regarding Defendant's
liability for civil racketeering. First, the State argues
that offensive collateral estoppel should apply to the
Board's factual findings. Second, the State argues
evidence remains unrebutted that Defendant operated and
benefitted from a criminal enterprise and that the
prostitutes worked for him. Third, the State argues the Court
should draw an adverse inference from the various tax-related
Requests for Admission in response to which Defendant invoked
the Fifth Amendment.
Defendant's motion for summary judgment, he argues the
State cannot prove the relatedness requirement under Section
1502(5), "Pattern of Racketeering Activity, "
because the predicate acts lack a common purpose and involved
different victims. Defendant also argues the State cannot
prove Section 1502(5)'s continuity requirement because
the predicate acts only span a twelve-and-a-half-month period
and do not pose a threat of continued criminal activity.
judgment should be awarded if "the pleadings,
depositions, answers to interrogatories and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of
law." When considering a motion for summary
judgment, the evidence and the inferences drawn from the
evidence are to be viewed in the light most favorable to the
nonmoving party. The Court will accept "as established
all undisputed factual assertions . . . and accept the
non-movant's version of any disputed facts. From those
accepted facts[, ] the [C]ourt will draw all rational
inferences which favor the non-moving
seeking summary judgment bears the initial burden of showing
that no genuine issue of material fact exists. If the movant
makes such a showing, the burden then shifts to the
non-moving party to submit sufficient evidence to show that a
genuine factual issue, material to the outcome of the case,
precludes judgment before trial.
There are material factual disputes that preclude judgment as
a matter of law in favor of the State.
case, the State alleges Defendant violated Delaware's
Organized Crime and Racketeering Act, 11 Del. C.
§§ 1501 et seq. (the "RICO
Statute"). Specifically, the State alleges four
predicate acts that it contends constitute racketeering,
including three counts of prostitution and one count of
permitting prostitution. Under the RICO Statute, a person is
prohibited from engaging in a pattern of racketeering
activity, which is defined as "two or more incidents of
conduct [t]hat [c]onstitute racketeering activity[, ] [a]re
related to the affairs of the enterprise[, ]" and
"[a]re not so closely related to each other and
connected in point of time and place that they constitute a
single event....'" "Racketeering activity"
includes, pertinently, any activity constituting a felony or
activity constituting a misdemeanor under Chapter 5 of Title
11 relating to prostitution. In this motion, the State alleges
that the four predicate acts in the complaint and the
undisputed facts show Defendant engaged in a pattern of
Offensive collateral estoppel does not apply to the
Board's findings because the damages at issue before the
Board comparatively were small and the hearing afforded the
parties fewer procedural opportunities.
State argues offensive collateral estoppel should apply to
the Board's findings of fact because the parties and
issues are identical. Offensive use of collateral estoppel
occurs when a plaintiff seeks "to foreclose [a]
defendant from relitigating an issue th[at] defendant has
previously litigated unsuccessfully in an action with another
party." Effectively, the doctrine allows a
plaintiff to use factual findings from one proceeding against
a defendant. The doctrine protects litigants "from the
burden of relitigating an identical issue with the same party
or his privy" and promotes judicial economy by
eliminating unnecessary relitigation of issues.
other hand, offensive collateral estoppel may, at times,
yield an unfair result. The presiding court therefore must
consider four factors that militate ...