RECENT DEVELOPMENTS IN BUSINESS LITIGATION

"16 In Heinrich v. Waiting Angels Adoption Services, Inc., the Sixth Circuit reversed the dismissal of civil RICO claims brought against an adoption service and its principals involving predicate acts that spanned less than two months.17 Although plaintiffs pled only four predicate acts of racketeering activity, the district court found these were sufficient to establish a pattern of racketeering activity.18 The four claims adequately alleged predicate acts of mail or wire fraud, specifically a scheme to defraud, use of the mail or wires in furtherance of the scheme, and a sufficient factual basis from which to infer scienter.19 The predicate acts involved defendants making false representations to would-be adoptive couples with die goal of defrauding them.\n Returning to basic contractual principles, the Titan court noted that an insurance policy is a contract and, therefore, unless prohibited by statute, common law defenses such as fraud may be invoked to avoid enforcement of an insurance policy.217 The court next stated that a party asserting actionable fraud, innocent misrepresentation, or silent fraud is not required to prove that it investigated all assertions and representations made by the contracting partner as a prerequisite to establishing fraud. [...]unless the common law, legal, and equitable remedies are narrowed by statute, an insurer is not required to conduct an investigation.218 The Titan court next reviewed prior holdings of the Michigan Court of Appeals, which had held that the Michigan Financial Responsibility Act limits the ability of insurers to avoid liability on the grounds of fraud in the inception of a policy for all liability policies.219 The prior holdings made a blanket ruling based on the language found in Michigan Compiled Laws § 257.520(f)(1), stating in relevant part: [t]he liability of the insurance carrier with respect to the insurance required by this chapter shall become absolute whenever injury or damage covered by said motor vehicle liability policy occurs; . . . [and] no fraud, misrepresentation, assumption of liability, or other act of the insured in obtaining or retaining such policy . . . shall constitute a defense as against such judgment creditor.220 The prior holdings applied only a small portion of one part of the Financial Responsibility Act to all liability policies.