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STATE OF MICHIGAN
COURT OF APPEALS


DAVID BRAXTON and TERESA JORDAN, Personal Representatives of the Estate of TELINA MARIE JORDAN, Plaintiffs-Appellants, v SCOTTISH GUARANTY INSURANCE COMPANY, Defendant-Appellee, and PETER A. FLAMER and THE FLAMER GROUP, Defendants-Appellees, and FIRESTONE AGENCY, Defendant.

UNPUBLISHED January 17, 1997

No. 184751 Macomb County LC No. 94-000482-CK

Before: Taylor, P.J., and Markey and N.O. Holowka,* JJ. PER CURIAM. Plaintiffs appeal as of right from the trial court's order denying their motion for entry of a default judgment for treble damages under the federal Racketeer Influenced and Corrupt Organizations ("RICO") act , 18 USC 1961 et seq., against defendants Peter A. Flamer and The Flamer Group. We affirm.

* Circuit judge, sitting on the Court of Appeals by assignment. -1

Plaintiffs obtained a judgment in the amount of $225,000.00 against the Van Dyke Sports Center, Inc. for the death of decedent, who died in an accident at an amusement park owned by Van Dyke. Defendant Scottish Guaranty Insurance Company, organized and apparently operated by defendant Peter Flamer and defendant Flamer Group, was obligated to pay the judgment pursuant to a contract of insurance between it and Van Dyke, but Scottish was financially unable to pay the judgment. After plaintiffs became the assignees of Van Dyke's claims against defendants, plaintiffs brought this action for treble damages under RICO against defendants, alleging in part that defendants Flamer and Flamer Group violated RICO, 18 USC 1962(c), because their acts of purporting to provide insurance through an insolvent company constituted mail fraud, 18 USC 1341, and wire fraud, 18 USC 1343. Because defendants failed to comply with a court order compelling answers to plaintiffs' interrogatories, the trial court entered a default against them. Plaintiffs subsequently requested a default judgment in the amount set forth in their complaint and for treble damages.1 The trial court granted the default judgment in the amount of $225,000.00 on the non-RICO claim but denied treble damages because (1) plaintiffs failed to specifically plead that while engaging in an interstate enterprise, defendants committed two or more predicate or indictable offenses within a ten year time span, and (2) even assuming plaintiffs' RICO claims were well-pleaded, plaintiffs lacked standing to recover treble damages because they were not injured by the predicate acts that formed the bases of the RICO claims. We agree that plaintiffs failed to plead with specificity their RICO claims. Plaintiffs argue that they are entitled to treble damages for their RICO claims against defendants because a default constitutes an admission by the defaulting party to all well-pleaded allegations. Entry of a default is equivalent to the defaulting party's admission of all well-pleaded allegations. American Central Corp v Stevens Van Lines, Inc, 103 Mich App 507, 512; 303 NW2d 234 (1981). The entry of a default does not, however, operate as an admission that the complaint states a cause of action. State ex rel Saginaw Prosecuting Attorney v Bobenal Investments, Inc, 111 Mich App 16, 22; 314 NW2d 512 (1981). Where the complaint fails to state a claim upon which relief can be granted, it will not support entry of a judgment obtained by a default. Hunley v Phillips, 164 Mich App 517, 523; 417 NW2d 485 (1987). Here, plaintiff's RICO allegations are anything but a model of clarity; indeed, they contain only the following: 18. By means of utilizing the United States Mail in violation of 18 USCS 1341 and telephone and other means of "wire" communications in violation of 18 USCS 1343, Defendants PETER A. FLAMER and THE FLAMER GROUP engaged in a pattern of racketeering activity in violation of 18 USCS 1961, 1962, 1964 and 1965, in that the said Defendants conducted an enterprise in which:
A. Defendant PETER A. FLAMER operated and was the principal offices [sic] of

Defendant SCOTTISH which Defendants purported to provide insurance in Michigan and other states in order to cause insureds and potential insureds to pay substantial premiums through Defendant PETER A. FLAMER to Defendant SCOTTISH. -2

B. Defendant PETER A. FLAMER knew that Defendant SCOTTISH was under

funded and was insolvent in that its obligations and potential obligations far exceeded its ability to meet those obligations and potential obligations.
C. Instead of applying premiums paid to be able to meet its obligations and potential

obligations, Defendant PETER A. FLAMER wrongfully caused premiums and other earnings of Defendant SCOTTISH to be diverted to Defendant PETER A. FLAMER and to Defendant THE FLAMER GROUP or for the benefit, directly or indirectly, of Defendant PETER A. FLAMER and Defendant THE FLAMER GROUP. WHEREFORE, Plaintiffs request Judgment against Defendants in an amount over $10,000.00 together with costs, interest and attorney fees plus triple damages. As a starting point, only 18 USC 1962 defines RICO violations. Thus, plaintiffs' allegations that defendants violated 18 USC 1961, 1964, or 1965 are simply not well-pleaded. Moreover, plaintiffs have failed to indicate by subsection which of the four RICO violations defined in

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