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State v. Wang

Superior Court of Delaware

May 11, 2018

THE STATE OF DELAWARE, Plaintiff,
v.
DA ZHONG WANG, Defendant.

          Submitted: February 12, 2018

         Upon Parties' Cross Motions for Summary Judgment: Denied

          Oliver J. Cleary, Esquire, of the STATE OF DELAWARE DEPARTMENT OF JUSTICE, Wilmington, Delaware, Attorney for Plaintiff.

          Brian T.N. Jordan, Esquire, of JORDAN LAW, LLC, Wilmington, Delaware, Attorney for Defendant.

          MEMORANDUM OPINION

          Abigan M. LeGrow, Judge

         The 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.[1]

         The 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.[2] 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.

         FACTUAL AND PROCEDURAL BACKGROUND

         The 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").

         On 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.

         On 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."

         In 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.

         In a 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.

         On 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.

         THE PARTIES' CONTENTIONS

         In its 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.

         In 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.

         ANALYSIS

         Summary 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."[3] 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.[4] 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 party."[5]

         A party seeking summary judgment bears the initial burden of showing that no genuine issue of material fact exists.[6] 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.[7]

         I. There are material factual disputes that preclude judgment as a matter of law in favor of the State.

         In this 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....'"[8] "Racketeering activity" includes, pertinently, any activity constituting a felony or activity constituting a misdemeanor under Chapter 5 of Title 11 relating to prostitution.[9] 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 racketeering activity.

         A. 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.

         The State argues offensive collateral estoppel should apply to the Board's findings of fact because the parties and issues are identical.[10] 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."[11] 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.[12]

         On the other hand, offensive collateral estoppel may, at times, yield an unfair result. The presiding court therefore must consider four factors that militate ...


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