In Re National Mortgage Equity Corp. Mortgage Pool Certificates Securities Litigation

MEMORANDUM OPINION AND ORDER

I. PROCEDURAL BACKGROUND

This multidistrict litigation involves allegations of massive fraud in connection with the sale of mortgage pool certificates to numerous savings banks and savings and loan associations (“Investor Institutions”). Before the Court are several defendants’ motions to dismiss the complaints in four of these actions, as well as two plaintiffs’ motions to dismiss certain counterclaims. 1

The complaints under attack are those of Riverhead Savings Bank (“Riverhead”), Missouri Savings Association (“Missouri”), First Federal Savings and Loan Association (“First Federal”), and Bank of America (“B of A” or the “Bank”). 2 B of A’s complaint differs significantly from the other three. *1144 It not only asserts claims which the Bank brings in its own right, but also claims which B of A purports to bring as the assignee of nineteen Investor Institutions that are alleged to be victims of the fraud. 3

This opinion addresses only the motions to dismiss directed at B of A’s complaint. The motions to dismiss the other three complaints, as well as the motions to dismiss certain counterclaims, will be addressed in a separate memorandum opinion to be filed shortly.

II. THE ALLEGED FACTS 4

A. FORMATION AND MARKETING OF THE POOLS

Defendant David A. Feldman (“Feldman”), promoted, organized and managed defendant National Mortgage Equity Corporation (“NMEC”). 5 Beginning in 1981, NMEC organized pools of real estate loans secured by first or second deeds of trust on residential real property, located primarily in California and Texas. Riverhead, Missouri and First Federal allege that defendants Wells Fargo Bank (“Wells Fargo”) and Advance Mortgage Corporation (“Advance”) 6 also played a role in promoting the formation of certain of the pools during 1981 and 1982. In connection with these mortgage pools, NMEC marketed “Mortgage Pass-Through Certificates” (the “Certificates”) to various financial institutions, i.e., the Investor Institutions. Each Certificate represented an undivided interest in an individual pool. The Certificate holder was entitled to receive interest at a fixed “pass-through” rate, regardless of the rates paid by individual mortgagors. NMEC solicited buyers of Certificates, i.e., Investor Institutions, through various means, including, as alleged by B of A, through Private Placement Memoranda (“PPM”). The PPM were prepared by defendant law firm Lord, Bissell and Brook (“Lord Bissell”). Defendant Leslie W. Michael (“Michael”), is a partner in Lord Bis-sell and was also a part owner and officer of NMEC.

NMEC was responsible for the initial selection of loans to be included in the pools. B of A was to act as escrow agent for each pool. Advance was to act as servicer on the mortgages for at least some of the pools, and did so act until March, 1983, when it resigned and was replaced by NMEC. NMEC apparently at all times acted as servicer for all the loans in the pools that form the basis of B of A’s complaint. A trustee was appointed for each pool. B of A was trustee for most of the pools, but with respect to four pools, Wells Fargo acted as trustee. 7 In their respective roles as trustees, Wells Fargo and B of A were to review the documentation NMEC provided regarding each mortgage in order to determine whether it complied with all the applicable standards set out in the pooling and service agreements.

*1145 NMEC, Feldman, Lord Bissell and Michael made numerous representations to the Investor Institutions regarding the nature of the mortgages selected for the pools. 8 Defendants represented that the underlying loans were made in arms-length transactions, the borrowers were capable of servicing their debts on the loans, the values of the residential properties involved were determined by independent appraisals, each loan was fully protected by mortgage insurance and that Glacier General Assurance Company (“Glacier”) and Pacific American Insurance Company (“Pacific American”), the primary insurers, had the financial resources to cover any likely defaults and had also secured reinsurance.

B. THE FRAUD

The essence of the fraud allegations is that despite defendants’ representations respecting the high standards used to select mortgages for the pools, defendants actually were engaged in a widespread series of sham mortgage transactions between various related entities that diverted the Investor Institutions’ funds for defendants’ personal benefit. Entities and individuals related to or controlled by NMEC, including Michael, Glacier, Energy Resources Financial Inc. (“Energy Resources”), Marvin Weiss (“Weiss”), West Pac Corporation (“West Pac”), and Kent B. Rogers (“Rogers”) 9 would obtain funds from NMEC. These entities or individuals would then use these funds to purchase properties through still other related entities. After obtaining a fraudulently inflated appraisal of the property, the related entities would arrange a “loan” between themselves, secured by a note and deed of trust on the overvalued property. The “loan” would then be transferred to NMEC’s mortgage pools in exchange for cash the Investor Institutions had entrusted to NMEC.

B of A alleges that Glacier and Pacific American were an integral part of this scheme. It is alleged that these insurance companies were selected to insure the mortgages not because of their ability to provide adequate coverage but because they were related, through common principals, to one or more of the other participants in the scheme. It also is alleged that the insurance companies actively participated in the scheme by recycling properties on which borrowers had defaulted back into the NMEC pools.

This scheme began to unravel in late 1984 and early 1985. In October, 1984, the Seaman’s Bank for Savings, one of the Investor Institutions for which B of A acted as trustee, advised the Bank of “certain irregularities in the processing and documentation” of the mortgages comprising Seaman’s pool. B of A responded by conducting an investigation into NMEC pools. Through this investigation, the Bank learned not only of the NMEC-managed fraud, but also that its own employees had not, in the Bank’s words, “adequately discharged the Bank’s responsibilities” as escrow agent and trustee. As a result of its investigation, B of A filed an action in California state court against several of its own employees for their roles in the handling of the NMEC pools.

B of A’s investigation also led it to conclude that as a result of the fraud, the Investor Institutions for which it had acted as trustee stood to lose all or most of their investments in the NMEC pools. The Bank, therefore, decided to “resolve its liability” to those Investor Institutions by repurchasing their Certificates or by replacing the mortgages in the pools represented by the Certificates. The Bank paid in cash and replacement collateral to the Investor Institutions a total of $133 million (which apparently was 100 percent of the funds *1146 invested in Certificates by them). It expects to realize $38 million on liquidation of the collateral and from the mortgage guarantee insurance claims assigned to it, leaving a net loss of $95 million from its resolving its liability to the Investor Institutions. In return, the Investor Institutions assigned to B of A any claims they might have against any of the defendants. 10 B of A then filed this action, both for damages sustained in its own right and as assignee of the Investor Institutions’ claims.

Unlike B of A, Wells Fargo chose not to pay off its beneficiaries. Therefore, Wells Fargo, which had performed essentially the same trustee functions as B of A with respect to Riverhead’s, Missouri’s and First Federal’s mortgage pools, was named by its beneficiaries as a defendant in this litigation.

B of A charges defendants NMEC, Feldman, Lord Bissell, Michael, West Pac, and Rogers with violations of: § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5; § 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a); the Racketeer Influenced and Corrupt Organization Act, Title IX of the Organized Crime Control Act of 1969 (“RICO”), 18 U.S.C. §§ 1961 et seq.; Cal. Corp.Code §§ 25401, 25501 & 25504.1; and common law fraud. There is also a claim against NMEC, Feldman, Lord Bissell and Michael under § 12(2) of the Securities Act of 1933, 15 U.S.C. § 77/(2), and a claim for breach of contract against NMEC alone. The Bank brings all of the above claims as assignee with the exception of the RICO claim, which is brought both as assignee and in the Bank’s own right and one count of common law fraud, which is brought in the Bank’s own right.

III. DISCUSSION

In their motion to dismiss B of A’s complaint, Lord Bissell and Michael (hereinafter, collectively “Lord Bissell”) assert that each of the claims the Bank brings against them 11 as assignee should be dismissed under the “one-satisfaction rule,” which is set forth in the Restatement (Second) of Torts § 885(3) (1979) 12 The one-satisfaction rule recognizes the principle that an injured party may recover only once for a single injury; its corollary is that any payment made by any person in compensation for a harm diminishes proportionally the injured party’s claim against any tortfeasors. Lord Bissell contends that B of A’s payments to its Investor Institutions constitute full satisfaction of those Investor Institutions’ claims and, thus, operate to discharge fully all other tortfeasors from any liability to those Investor Institutions. See Restatement § 900(l)(b) & comment 5. 13 Lord Bissell *1147 argues further that B of A should not be permitted to. avoid the effect of the one-satisfaction rule by purporting to obtain assignments of the Investor Institutions’ claims. Instead, they contend, the Bank must pursue the traditional remedies available to joint tortfeasors, i.e., actions for contribution and/or indemnity.

The Court agrees with Lord Bissell’s contentions with respect to the applicability of the one-satisfaction rule here and the assignability of the federal and state securities claims and the common law fraud claim. Consequently, those counts must be dismissed; however, B of A will be granted leave to file an amended complaint for contribution and/or indemnity, if it so elects. 14 I further conclude that the RICO claims are assignable and that B of A should be permitted to pursue the Investor Institutions’ RICO claims, as their assignee.

A. ASSIGNABILITY OF FEDERAL SECURITIES CLAIMS AND STATE LAW CLAIMS

Before discussing the validity of the Investor Institutions’ assignments, the Court first must consider whether the one-satisfaction rule applies to the types of claims the Investor Institutions have assigned to the Bank. The applicability of the single-satisfaction rule to federal statutory claims in general, and securities claims specifically, is not in doubt. E.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 348, 91 S.Ct. 795, 811, 28 L.Ed.2d 77 (1971) (antitrust); Ratner v. Sioux Natural Gas Corp., 719 F.2d 801, 803-04 (5th Cir.1983) (applying Texas tort law in federal securities case); MacKethan v. Burras, Cootes & Burras, 545 F.2d 1388, 1390-91 (4th Cir.1976), cert. denied, 434 U.S. 826, 98 S.Ct. 103, 54 L.Ed.2d 85 (1977) (securities); Gould v. American-Hawaiian S.S. Co., 535 F.2d 761, 784 & n. 30 (3d Cir.1976) (securities); Screen Gems— Columbia Music Inc. v. Metlis & Lebow Corp., 453 F.2d 552, 554 (2d Cir.1972) (copyright infringement).

It likewise is settled that the rule applies to the claims the Bank brings under California law. California expressly recognizes the one-satisfaction rule. CaLCode Civ.Proc. § 877 15 California courts applying § 877 have held that if the amount paid to an injured party equals or exceeds the amount of the loss, no claim remains against other joint tortfeasors. E.g., Jaramillo v. California, 81 Cal.App.3d 968, 970-71, 146 Cal.Rptr. 823 (1978).

Next, the Court must consider whether the single-satisfaction rule applies in the specific factual circumstances of this case. The rule explicitly states that an injured party’s claim is diminished to the extent that payments are made “in compensation” for an injury. Thus, the rule by its terms does not apply in cases where a third party merely purchases the injured party’s cause of action. The compensation requirement is met here, however, both on the face of the complaint and by counsel’s admission at oral argument that B of A “stepped up to its responsibility and absolved the liability and took over the claims.”

Not only does the one-satisfaction rule apply in this case, but so does the “discharge” rule of Restatement § 900(l)(b). That rule provides that if an injured party accepts one tortfeasor’s payment as pay *1148 ment in full, then all other tortfeasors are discharged from liability for the same injury. Here, the Bank’s complaint admits to some degree of liability to the Investor Institutions; thus, it must be regarded as a “tortfeasor”. It follows that the Bank’s payments were made by a “tortfeasor”; consequently, § 900(l)(b) applies.

In sum, it appears that Restatement §§ 885(3) & 900(l)(b) ordinarily would have extinguished completely the Investor Institutions’ claims against any other defendants as soon as the Bank paid off those Investor Institutions in full. However, the analysis must now turn to the more difficult aspect of this case, i.e., whether and to what extent the purported assignments effect application of the Restatement rules.

There are surprisingly few reported cases that address the question presented here, i.e., whether a party who has been fully compensated for an injury nonetheless may assign its claims to someone else. The parties here, after exhaustive research, have between them, cited to the Court only three federal cases arguably on point. I find persuasive the reasoning of St. Paul Fire & Marine Ins. v. Michigan Nat’l Bank, 660 F.2d 196 (6th Cir.1981), and American Sur. Co. v. Bank of Calif, 133 F.2d 160 (9th Cir.1943), and reject the reasoning of the case primarily relied on by the Bank, American Commercial Lines v. Valley Line Co., 529 F.2d 921 (8th Cir.1976).

In American Sur., an insurer had fully paid an insured party for its loss and subsequently took an assignment of that party’s claims against a bank. The Ninth Circuit, applying Oregon law, first decided that the insurer was not entitled to equitable subrogation, 16 then decided that the “assignment” did not give the insurer a right to sue the bank:

If Insurers have no right to subrogation, their position is not improved by the assignments to them of insured’s claim against Bank. When Insurers paid [the insured], the right of [the insured] to pursue its claim against Bank was destroyed as [the insured] would not be permitted a dual recovery. Therefore, there was in existence no enforceable claim against Bank which [the insured] could assign to Insurers, and which would support recovery in favor of Insurers.

133 F.2d at 164.

In St. Paul Fire & Marine, the Sixth Circuit applied Michigan law to a similar situation. There, St. Paul, acting as surety on a contractor’s bond, paid the claim of a subcontractor that had been injured by a bank’s untimely dishonor of the contractor’s check. St. Paul then obtained from the subcontractor a release and an assignment of the subcontractor’s claim against the bank. The Sixth Circuit held that St. Paul could not bring such an action as assignee because “after the underlying obligation had been satisfied by St. Paul, no cause of action against Michigan Bank remained in existence that could be assigned.” 660 F.2d at 197. The court, citing American Sur., also stated that:

... allowing an assignee to maintain a cause of action against one independently liable when the injured party has already received full compensation from another who is also liable would, in effect, give the injured party double recovery.

Id. at 199.

Two related principles emerge from these cases. First is the concern with *1149 avoiding situations in which a plaintiff might effectively receive a double recovery. More importantly, however, these cases also expressly acknowledge something that should be quite obvious — once an injured party is fully compensated for its injury, whether by a tortfeasor or someone else, its claim is extinguished by operation of law, Restatement §§ 885(3) & 900(l)(b), comment b, and there simply is nothing remaining for the injured party to assign. 17

B of A argues strenuously that the first of the above-described principles — the prohibition against double recovery— should not bar the assignments in the case at bench. The Bank urges the Court to take a “realistic view” of the instant case and recognize that there is no danger of an actual double recovery here by the assign- or-investor Institutions. 18 The Bank thus urges the Court to ignore the holdings of cases such as American Sur. and St. Paul, which the Bank characterizes as “embodying an anachronistically formal view of the law.” However, even were I persuaded by the Bank’s argument regarding double recovery, the Bank has not adequately refuted the other prong of the analysis — -that once an injured party receives compensation for a claim, that party is left with nothing to assign.

The primary case relied on by the Bank, American Commercial Lines, is not convincing. In that case, two ships passed each other closely on the Mississippi River and one of the ships collided with some shoreline structures. The ship that actually struck the property (American), paid the injured property owners $33,000 in return for a release and an assignment of the injured parties’ claims against the other ship (Valley). American then brought suit against Valley on the assigned claims. Valley argued that by releasing American, the injured parties also released Valley; therefore, that the injured parties had nothing left to assign. A split panel rejected that argument, holding that in executing the release and assignment, the injured parties clearly intended to “(1) give a release of their claims against American ...; (2) retain, for purposes of giving an assignment, their claims against Valley; and (3) give an assignment of their claims against Valley to American.” 529 F.2d at 925. The majority held that Valley’s proposed construction of the agreements would render the assignment portion of each document a “meaningless act.” Id.

With respect, I cannot accept the reasoning in American Commercial. First, the majority did not even consider the single-satisfaction rule, but instead grounded its decision on a contractual construction theory. Thus the case sheds no light on the legal principles that control the instant case. Moreover, by focusing on the intent of the parties, the decision contravenes Restatement § 885(3), which provides that a payment made in compensation of a harm diminishes the claim against other tortfeasors “whether or not it is so agreed at the time of payment.” (Emphasis added.) See also Screen Gems, 453 F.2d at 554.

As stated previously, the Bank did not pay off its Investor Institutions for altruistic reasons. Rather, it is clear that the Bank, after its investigation of the NMEC pools, realized that it bore at least some of the responsibility for the Investor Institutions’ losses. Had the Bank not reimbursed the Investor Institutions for their losses, it almost certainly would have found itself in the same position as Wells Fargo — a named defendant. As the Bank itself stated in its complaint:

The Bank recognized that the Investor Institutions would lose all or a significant portion of their investments in the NMEC pools. In response to the Investor Institutions’ demands, the Bank undertook to resolve its obligations to *1150 them by repurchasing the Certificates or replacing the mortgages represented by the Certificates.

Comp., 1155 (emphasis added). The Bank thereafter took these assignments, obviously hoping to recoup its losses from the defendants. This is precisely the type of situation that the law of contribution and indemnity is intended to govern.

It is critical to the course of this litigation that the parties be aligned properly. If the Bank is permitted to appear as a plaintiff bringing direct claims, rather than as a party seeking contribution or indemnity, it would have a profound effect on the other litigants’ defenses, discovery, and overall strategies. Allowing the assignments in this case would permit the Bank to pursue theories of recovery it could not pursue in an action for indemnity or contribution. For example, the Bank has brought assigned claims that seek relief under the Securities Act of 1933. Those claims seek complete recovery for all losses the Investor Institutions may have sustained from violations of that Act. Absent the assignments however, the Bank would not be able to seek such a complete recovery, since the Ninth Circuit has denied a right to indemnification under the 1933 Act. Laventkol, Krekstein, Horwath & Howath v. Horwitch, 637 F.2d 672, 676 (9th Cir.1980), cert. denied, 452 U.S. 963, 101 S.Ct. 3114, 69 L.Ed.2d 975 (1981). The Bank’s recovery would thus be limited to whatever proportionate share of the losses it could exact from the other defendants in an action for contribution. Id. at 674-75. 19

The Court cannot permit such drastic alteration of the procedural and substantive posture of this litigation that would result from permitting these assignments to stand. As stated in the Restatement of Restitution § 86, comment c:

Neither in the case of indemnity nor in the case of contribution can a person obtain an advantage by taking an assignment of the claim of the injured person either before or after judgment.

The Court’s conclusion is buttressed by a line of California cases holding that assignments may not be maintained in situations where, as here, the effect of the assignment would be somehow to circumvent restrictions imposed by the law of contribution. For example, California courts, as well as federal courts applying California law, have barred the assignment of claims where the practical effect of the assignment would have been to permit contribution between joint, intentional tortfeasors, to whom California expressly denies a right of contribution under Cal.Code Civ.Proc. § 875(d). E.g., Bartneck v. Dunkin, 1 Cal.App.3d 58, 61-62, 81 Cal.Rptr. 428 (1969); Martinez v. De Los Rios, 187 Cal.App.2d 28, 33-35, 9 Cal.Rptr. 326 (1960); Bennett v. Dunn, 504 F.Supp. 981, 986 (D.Nev.1980). These cases confirm the fundamental principle that established tenets for apportioning damages between joint tortfeasors must be respected. No cogent reason has been advanced why that principle should not apply in this case with respect to the assigned federal securities claims, as well as the state law claims.

Finally, the policy argument that B of A asserts to justify these assignments is not convincing. The Bank argues it “did the right thing” by settling with its Investor Institutions, rather than forcing them to litigate their claims and that such settlements should be encouraged. However, the same laudable result can be achieved, while complying with the laws of contribution and indemnity. Those laws clearly permit a party in the Bank’s position to recover from other wrongdoers without involving completely innocent parties in protracted litigation. The difference, however, is that unlike proceeding by way of assignments and bringing the Investor Institutions’ claims in a plaintiff’s posture, the Bank’s potential recovery is limited, as *1151 it should be, by the rules inhering in actions for contribution and/or indemnity.

B. ASSIGNABILITY OF RICO CLAIMS

As explained more fully below, I conclude that while the one-satisfaction rule applies to RICO, it does not operate to extinguish fully the Investor Institutions’ RICO claims in this case. I also conclude that the assignments of the RICO claims are valid. However, I conclude that B of A’s RICO allegations are deficient. Accordingly, the RICO claims will be dismissed, but with leave to amend.

1. Applicability of the One-Satisfaction Rule

Although there appears to be no cases addressing the issue, the Court believes it quite clear that the basic principle expressed in the single-satisfaction rule is as applicable to a RICO claim as it is to any other claim by which a plaintiff seeks damages to redress an injury. The extent to which the rule extinguishes the Investor Institutions’ RICO claims is complicated, however, by RICO’s treble damage provision, 18 U.S.C. § 1964(c). To determine the proper scope of the rule’s application in this case, the Court must answer the question, What constitutes “full satisfaction” of a treble damages claim?

There are two possible approaches to the problem. On the one hand, it can be argued that since the one-satisfaction rule diminishes a plaintiff’s claim “at least to the extent of the payment made,” Restatement § 885(3), the Bank’s payments to the Investor Institutions should constitute compensation for only the first one-third of the treble damages to which the Investor Institutions would have been entitled under § 1964(c). Under this approach, the other two-thirds of the Investor Institutions’ potential treble damage awards would remain unaffected by the one-satisfaction rule, and (assuming RICO claims are assignable) could be assigned to the Bank. Under the other possible approach, it could be argued that the Bank’s payments to the Investor Institutions constituted full compensation for any actual damages suffered by reason of any RICO violation; therefore, that the entire RICO claim should be deemed extinguished, because no actual damages remain, which could be trebled. I conclude the former approach is more likely to effectuate the purposes for which RICO was enacted.

The case at bar analytically is indistinguishable from an antitrust case in which a plaintiff sues multiple defendants for treble damages, settles with one or more of them and then prevails at trial against the remaining defendants). In such cases, the court must decide whether, in crediting the settlement payments against the treble damage award, to do so before or after the trebling of actual damages. Without exception, courts hold that the full award to which such plaintiffs are entitled is an amount three times the proven actual damages and that, to ensure that plaintiffs receive complete satisfaction of their claims, settlement payments should be deducted from the award against the non-settling defendants) after actual damages are trebled. E.g., Flintkote Co. v. Lysfjord, 246 F.2d 368, 398 (9th Cir.), cert. denied, 355 U.S. 835, 78 S.Ct. 54, 2 L.Ed.2d 46 (1957). Flintkote, the first appellate case to consider this question, expressly addressed the relationship between the single-satisfaction rule and the treble damages provision of § 4 of the Clayton Act, 15 U.S.C. § 15:

Irrespective of the nature of the cause of action, a plaintiff is entitled to one full satisfaction of his claim in an action against joint defendants. In the case at bar ... such satisfaction would not be achieved by the award of any sum, which added to the settlement sum, did not total [three times the jury’s actual damage award].

Id. (emphasis added). Thus, “[a]ny other method [of calculating damages] would have resulted in plaintiffs’ receiving less than the whole to which they were entitled.” Id.

*1152 Cases since Flintkote have uniformly accepted its rule. E.g., Burlington Indus. Inc. v. Milliken & Co., 690 F.2d 380, 391-95 (4th Cir.1982), cert. denied, 461 U.S. 914, 103 S.Ct. 1893, 77 L.Ed.2d 283 (1983); Hydrolevel Corp. v. American Soc’y of Mechanical Eng’rs, Inc., 635 F.2d 118, 130 (2d Cir.1980), aff'd on other grounds, 456 U.S. 556, 102 S.Ct. 1935, 72 L.Ed.2d 330 (1982). In Hydrolevel, the Second Circuit cogently articulated the reasons why treble damage awards should not be diminished by settlement payments until after trebling:

First, the antitrust laws provide that the plaintiff should receive three times the proven actual damages. If settlement proceeds are deducted before trebling, the plaintiff’s total award is less than what the law allows. Since antitrust defendants are joint tortfeasors, each is liable to complete the total deserved damages irrespective of fault. Second, ... one purpose of the trebling provision is to encourage private plaintiffs to bring suit. Any ultimate recovery totalling less than three times proven damages would weaken the statutory incentive through judicial construction. Third, deduction of settlement proceeds before trebling would discourage settlement by making litigation relatively more profitable for plaintiffs; every dollar received in settlement would cause a three dollar reduction in the judgment at trial.

Id.

The Court concludes that the Flintkote rule and its rationale are applicable to RICO treble damage claims. The Court acknowledges that the facts of the instant case differ somewhat from those of the antitrust cases cited above, since here, the Investor Institutions’ actual damages were completely, rather than only partially, satisfied. However, that factual distinction does not alter the analysis, because the critical factor is that the “full satisfaction” to which treble damage claimants are entitled is “three times the proven actual damages” — any award less than that amount constitutes an incomplete recovery. Therefore, the Court concludes that the single-satisfaction rule did not extinguish the Investor Institutions’ RICO claims. However, it should be noted that under this rule, it is clear that if defendants ultimately are found liable on the assigned RICO claims, they are entitled to the “Flintkote credit,” i.e., that they may assert the Bank’s payments to the Investor Institutions as an offset against the treble damage award.

2. Should “Penal” Nature of RICO Damages Affect Assignability

The question of whether a RICO treble damage claim is assignable apparently is one of first impression. The RICO statute itself is silent on the issue. Where a claim for relief is created by a federal statute, federal law governs the assignability of the claim. In re Fine Paper Litig., 632 F.2d 1081, 1090 (3d Cir.1980) (assignability under Sherman and Clayton Acts a matter of federal law); Isidor Weinstein Inv. Co. v. Hearst Corp., 303 F.Supp. 646, 649 (N.D.Cal.1969) (same).

B of A argues that in the absence of express statutory language, the court should look for guidance to analogous statutes, in this case to the antitrust laws. The Bank contends that, since it is well established that'antitrust claims are assignable, e.g. Hicks v. Bekins Moving & Storage Co., 87 F.2d 583, 585 (9th Cir.1937); Jefferson County Pharm. Ass’n, Inc. v. Abbott Lab., 656 F.2d 92, 98 (5th Cir.1981); D’Ippolito v. Cities Serv. Co., 374 F.2d 643, 647 (2d Cir.1967); Louisiana Farmers' Protective Union v. Great A & P Tea Co., 131 F.2d 419, 423 (8th Cir.1942), and since the RICO treble damages provision clearly was modeled after the almost identical language found in § 4 of the Clayton Act, 15 U.S.C. § 15, see Sedima, S.P.R.L. v. Imrex Co., — U.S. -, 105 S.Ct. 3275, 3280-81, 87 L.Ed.2d 346 (1985); State Farm Fire & Cas. Co. v. Estate of Caton, 540 F.Supp. 673, 680 (N.D.Ind.1982); see generally Cornell Institute on Organized Crime, Techniques in the Investigation and Prosecution of Organized Crime (G. Robert Blakey ed.) (1980) at 58-70 (“Tech *1153 ñiques ”), it follows that RICO treble damage claims likewise should be assignable.

On the other hand, Lord Bissell argues that, rather than simply analogizing to antitrust law, the inquiry regarding RICO’s assignability more properly should focus on the character of the RICO treble damages provision itself, 18 U.S.C. § 1964(c), to determine whether it is penal or remedial in nature. Lord Bissell asserts the following three-part argument: (1) the RICO treble damages provision is best characterized as penal, see, e.g. Summers v. FDIC, 592 F.Supp. 1240 (W.D.Okla.1984); First Interstate Bank v. National Republic Bank [1984-85 Transfer Binder] Fed.Sec.L.Rep. (CCH) It 91,994 at 90,932-33 (N.D.Ill.1975); (2) actions for penalties do not survive the deaths of defendants, see First Interstate Bank, It 91,994 at 90,932, or of plaintiffs, see Smith v. No. 2 Galesburg Crown Fin. Corp., 615 F.2d 407, 414 (7th Cir.1980); and (3) traditionally, actions that are not survivable are not assignable. Prosser & Keeton, Law of Torts, § 126 at 944 (5th ed. 1984). See Murphy v. Allstate Ins. Co., 17 Cal.3d 937, 942, 132 Cal.Rptr. 424, 553 P.2d 584 (1976) (punitive damage claim not assignable under California law). 20 To buttress its argument as to the inappropriateness of the antitrust analogy, Lord Bissell points to language in Hicks, which seems to suggest that the underlying rationale for permitting the assignment of antitrust claims is that those claims are not penal and, therefore, are both survivable and assignable:

An action to recover damages [under the Sherman Act] is not an action to recover a penalty ... [s]uch a cause of action does survive the death of the injured party and is assignable.