Full opinion text
OPINION LOUIS H. POLLAK, District Judge. ' Plaintiffs, a group of individual investors, purchased security interests in two limited partnerships—the Sovereign Realty 1984-VII, Ltd., d/b/a The Sovereign Building, a Pennsylvania limited partnership (“the Sovereign Partnership”) and Sovereign Realty 1985-2 Ltd., d/b/a Crestwood Apartments, limited partnership (“Crestwood Partnership”)—organized and promoted by defendants, Sovereign Group, Inc., Butcher & Company, Sovereign Realty Management, Deilwydd Properties 303-A, Ltd., Lyle W. Hall, Jr., John S. Seal, Jr., Deilwydd Properties 603-A, Ltd., Butcher & Singer, Inc., B & S and Sovereign Management, and Deilwydd Properties 304-A. Plaintiffs from Exhibit A of the amended complaint (“A-plaintiffs”) purchased securities in the form of cash and notes in the Sovereign Partnership, while plaintiffs from Exhibit B of the amended complaint (“B-plaintiffs”) purchased securities in the form of cash and notes from the Crestwood Partnership. In connection with the above securities transactions, A-plaintiffs' allege that Sovereign Group, Inc., Butcher & Company, Sovereign Realty Management, Deilwydd Properties 303-A, Ltd., Lyle W. Hall, Jr., John S. Seal, Jr., Deilwydd Properties 603-A, Ltd., and Butcher & Singer, Inc. (“Sovereign defendants”) violated § 10(b) of the Securities Exchange Act (15 U.S.C. § 78j(b)) and Rule 10b-5 promulgated thereunder (Claim I). In addition, all plaintiffs allege that defendants: engaged in a pattern of racketeering activity in violation of RICO, 18 U.S.C. §§ 1961 et seq. (Claim II); and engaged in conduct that was fraudulent (Claim III), negligent (Claim V), and in breach of their fiduciary duty (Claim VI). Presently before the court is defendants’ motion to dismiss plaintiffs’ claims pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). For the following reasons, defendants’ motion shall be granted in part and denied in part. I. Standard of Review A claim should be dismissed under Fed.R.Civ.P. 12(b)(6) only where, taking all allegations of the complaint as true, and making all reasonable inferences in the complainant’s favor, “it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of their claim which would entitle them to relief.” Wisniewski v. Johns-Mansville Corp., 812 F.2d 81, 83 n. 1 (3d Cir.1987) (citations omitted); see also Unger v. National Residents Matching Program, 928 F.2d 1392 (3d Cir.1991.) The standard is the same for RICO and non-RICO claims. Rose v. Bartle, 871 F.2d 331, 355 (3d Cir.1989). It should be noted that defendants have submitted a number of exhibits with their motion to dismiss. Among defendants’ exhibits are the Sovereign Partnership offering memorandum, the Crestwood Partnership offering memorandum and the September 1989 Sovereign Partnership Information Statement. Plaintiffs allege in their complaint that defendants made a number of misrepresentations and omissions in these three documents. However, plaintiffs did not themselves attach the documents to their complaint. In general, a court may not consider materials outside the pleadings and the briefs without converting a motion to dismiss into a motion for summary judgment. Fed.R.Civ.P. 56. However, since the above three documents are integral to the plaintiffs’ complaint, I believe that they are properly reviewable on a 12(b)(6) motion. “A contrary holding would enable plaintiffs to survive a 12(b)(6) motion where the terms of the document on which the claim is based would render the complaint insufficient as a matter of law, simply by refusing to attach the document to the complaint.” Goodwin v. Elkins & Co., 730 F.2d 99, 113 (3d Cir.1984) (Becker, J., concurring). See In re Donald Trump Casino Securities Litigation, 793 F.Supp. 543, 546 n. 1 (D.N.J.1991). See also I. Meyer Pincus & Assoc. v. Oppenheimer & Co., 936 F.2d 759, 762 (2d Cir.1991); Romani v. Shearson Lehman Hutton, 929 F.2d 875, 879 n. 3 (1st Cir.1991). While I will refer to the three documents mentioned, as well as to the published opinions from the district courts from the Southern District of New York and from the District of New Jersey, I find it unnecessary to refer to the other materials submitted by defendants to decide the present motion. II. Facts As explained by plaintiffs, defendants formed a number of limited partnerships during the early 1980’s. These limited partnerships would purchase or lease property, offering for sale units of the property to interested investors. At that time, investment in real estate was a rather safe investment, providing opportunities for property appreciation, profit and tax benefits. According to plaintiffs, defendants played the following roles within the limited partnerships: (a) Deilwydd Properties 303-A, Ltd. (“303-A”) is a Pennsylvania limited partnership. 303-A acted as general partner for the Sovereign Partnership. 303-A’s general partners were defendants Lyle W. Hall, Jr. and John S. Seal, Jr. (b) Deilwydd Properties 603-A, Ltd. (“Contractor”) is a Pennsylvania limited partnership. Deilwydd Properties 603-A acted as the contractor for the Sovereign Partnership. The Contractor’s general partners were also defendants Lyle W. Hall, Jr. and John S. Seal, Jr. (c) Deilwydd Properties 304-A (“304-A”) is a Pennsylvania limited partnership. 304-A acted as general partner for the Crestwood Partnership. 304-A’s general partners are also defendants Lyle W. Hall, Jr. and John S. Seal, Jr. (d) Lyle W. Hall, Jr. (“Hall”) acted as a general partner of 303-A, 304-A and Contractor. (e) John S. Seal, Jr. (“Seal”) acted as a general partner of 303-A, 304-A and Contractor. (f) Sovereign Group, Ine. (“Sovereign”) is a Pennsylvania corporation and parent company of Sovereign Realty Management____ Sovereign is the parent company of Sovereign Partners, Inc. which owns a 50% interest in 303-A and 304-A. (g) Butcher & Company (“Butcher”) is a Pennsylvania corporation and is the parent company of Sovereign. In addition to Sovereign Group, Inc., ... Butcher and Singer, Inc. is a wholly owned subsidiary of Butcher____ (h) Butcher and Singer, Inc. (“B & S”) is a Pennsylvania corporation and a wholly owned subsidiary of Butcher. B & S acted as the selling agent for both the 303-A and 304-A partnership[s], (i) Sovereign Realty Management (“Sovereign Realty”) is an unincorporated subsidiary of Butcher. Sovereign Realty acted as the management company for the 303-A and 304-A projects. Amended Complaint (“Am. Comp.”) at ¶7. This case involves defendants’ conduct with respect to two of their supposedly many limited partnerships: the Sovereign Partnership and the Crestwood Partnership. I will address each transaction in turn. A. The Sovereign Partnership The Sovereign Partnership, in which only the A-plaintiffs invested, was formed “to acquire, renovate and operate, as an office and retail complex, four buildings located next to each other in Philadelphia, Pennsylvania.” Am. Comp, at ¶ 20. The goals of the partnership were to preserve the partners’ capital contribution, garner a return on the investment once the project began operating in 1989, appreciate the value of the project, and receive tax benefits. Am. Comp, at ¶ 22 (citing the Private Placement Memorandum distributed by the Sovereign Partnership (“Sovereign PPM”) in connection with the sale of the property units). The renovation of the Sovereign buildings was supposed to commence in 1984 and be completed by 1985. Am. Comp, at ¶ 21. Defendant Deilwydd Properties 603-A, Ltd. was hired by the Sovereign Partnership as the contractor responsible for the renovation. Under the construction contract, the contractor was responsible for the design and execution of all renovations, and would pay “all project costs” as defined in the contract. Am. Comp, at ¶25. The construction contract, affixed as an appendix to the Sovereign PPM, also provided that the renovation was to be done for the fixed price of $10,550,000. Am. Comp, at ¶26. Accordingly, the Sovereign Partnership acquired a $12,000,000 loan to finance the project. Am. Comp, at ¶ 26. A-plaintiffs explain that they distinctly relied on defendants’ representation that the construction costs would be fixed in deciding to invest in the partnership. Am. Comp, at ¶27. However, not atypically, the construction costs exceeded expectations and the contractor refused to complete the renovation for $10,550,000, claiming that the contract did not contemplate “finishing” costs. The Sovereign Partnership agreed and permitted an increase in construction costs. The Sovereign Partnership was forced to negotiate a new loan in 1987 for $18,000,000—50% more debt than plaintiffs originally expected to incur. Plaintiffs contend that the Sovereign Partnership was not in a sufficiently strong financial position to service the increased debt. Yet, defendants failed to inform the investors of the threatened state of the partnership. About two years later, though, in July 1989, the Sovereign Partnership did inform plaintiffs of the partnership’s “dire financial straits.” Am. Comp, at ¶ 32. In addition, defendants told its investors that Seal and Hall were being replaced as the general partners of 303-A, “and as a requirement for the change, the limited partners [of the Sovereign Partnership] would be forced to relinquish a substantial portion of their interest in the limited partnership.” Am. Comp, at ¶ 32. On September 18, 1989 Butcher sent a letter to the general partners, containing an information statement and mutual release and consent form. This packet of materials warned investors that failure to agree to the replacement of the general partners and to sign a general release would result in the Sovereign Partnerships’ insolvency and would possibly subject the limited partners to substantial recapture of income taxes. Am. Comp, at ¶ 33. According to plaintiffs, the information attributed the Sovereign Partnership’s economic hardship to the softness of the real estate market at the time. Am. Comp, at ¶ 34. Finally, plaintiffs allege that the Sovereign PPM, the letters to investors and the information statement contained several misrepresentations and omissions and that plaintiffs relied on these misrepresentations and omissions both in their initial decision to purchase an interest in the partnership and in their later decision to relinquish a portion of their interest in the partnership to a new general partner. Am. Comp, at ¶42. B. The Crestwood Apartment Project The Crestwood Partnership was “organized to acquire and operate a 267-unit apartment complex located in Mesa, Arizona.” Am. Comp, at ¶ 43. The goals of the partnership were to preserve the partners’ capital contribution, to appreciate the value of the project, and to receive tax benefits and cash distributions. Am. Comp, at ¶ 44 (citing the Crestwood Apartment Private Placement Memorandum (“Crestwood PPM”) distributed to investors in connection with the sale of the property units). According to plaintiffs, these goals could only be achieved if the Crestwood Partnership held the land for several years. During those years, the partnership would be responsible for certain monthly expenses and debt service payments. ' In order to assure investors that the Crestwood Partnership would have sufficient incoming income to cover their costs, the partnership hired the accounting firm of McGlarrey, Henderson and Pollen to prepare income projections regarding revenues and expenses. These projections, included in the Crestwood PPM, concluded that the partnership’s receipts would cover the expenses. Am. Comp, at ¶48. Now, plaintiffs contend that the assumptions used to create the projections were unreasonable. A good portion of the Crest-wood Partnership’s revenues would come from apartment rentals. In making the partnership’s financial projections, the accounting firm assumed a vacaney/rent loss rate of 5%. According to plaintiffs, the vacaney/rent loss rates for the Phoenix metropolitan area—which includes Mesa—ranged from 6.8% to 10.8% in 1984. Am. Comp, at ¶¶ 51, 53. In that the financial projections for the partnership served to predict the ultimate viability of the Crestwood Partnership project, plaintiffs allege that they relied on them in the decision to purchase their interests. III. Procedural History This is not the first time the plaintiffs have brought suit against the defendants with respect to the Sovereign or Crestwood Partnerships. On February 1, 1990 A-plaintiffs sued the Sovereign defendants in the Southern District of New York. According to plaintiffs, “the allegations in that [New York action] Complaint are essentially repeated here in this Amended Complaint.” Plaintiffs’ Mem. of Law in Opp. to Defendants’ Motion to Dismiss (“Plaintiffs’ Opp.”) at 16. The Sovereign defendants moved to dismiss the complaint on the grounds that the forum selection clause in the Sovereign Partnership Agreement required that the case be heard in Pennsylvania. The district court agreed and dismissed the case on October 4, 1991. Plaintiffs’ Opp. at 17. On April 4, 1991 B-plaintiffs filed suit concerning defendants’ conduct in the Crest-wood Partnership project in the Illinois State Circuit Court of the Twelfth Judicial Circuit. The claims against defendants sounded in fraud, negligence, and breach of fiduciary duty. Plaintiffs did not raise either a § 10(b) or RICO claim against defendants in the Illinois suit. Defendants moved to dismiss plaintiffs’ complaint on the grounds that the court lacked personal jurisdiction. The Illinois court agreed and dismissed the action. Plaintiffs filed the present action on April 9, 1992. IV. Discussion Defendants assert that plaintiffs’ amended complaint should be dismissed under Fed. R.Civ.P. 12(b)(6) as plaintiffs have failed in each count to state a claim upon which relief can be granted. According to defendants, all of plaintiffs’ claims are either time-barred or do not state a cause of action. In addition, defendants contend that plaintiffs’ fraud claims should be dismissed under Fed. R.Civ.P. 9(b) as plaintiffs have failed to plead fraud with sufficient particularity. I will discuss each of plaintiffs’ five claims. A. The 10(b) Claim A-plaintiffs have alleged that the Sovereign defendants violated § 10(b) and Rule 10b-5 by making material misrepresentations and omissions in the Sovereign PPM in connection with the sale of securities. Am. Comp, at ¶ 66; Plaintiffs’ Opp. at 43-44. Sovereign defendants contend that A-plaintiffs’ securities claim is time-barred. I agree. 1. Statute of Limitations A-plaintiffs filed their § 10(b) claim in New York district court in February 1990. Upon the dismissal of the claim by the New York court, A-plaintiffs refiled their § 10(b) claim in Pennsylvania district court in April 1992. In the time between these two filings, the law concerning the limitations period for § 10(b) claims underwent a dramatic change. The Securities Exchange Act does not specify the limitations period for § 10(b) claims, and as of February 1990 the circuits were split as to how this time period should be determined. At that time, a number of circuits—including the Second Circuit—ascertained the statute of limitations for § 10(b) claims by looking to state statutes of limitations for parallel causes of action. See Ahmed v. Trupin, 781 F.Supp. 1017 (S.D.N.Y.1992) (discussing history of Second Circuit law concerning limitations period for § 10(b) claims). For example, the Second Circuit applied the New York statute of limitations for fraud to § 10(b) claims, requiring § 10(b) plaintiffs to bring their claims within two years of discovering the violation and in no case later than six years of the violation. N.Y.Civ.Prac.L. & R. § 213(8). Other courts—including the Third Circuit—considered it inappropriate that the statute of limitations for a § 10(b) claim would vary from state to state and believed there should be a uniform federal statute of limitations. See In re Data Access Systems Securities Litigation, 843 F.2d 1537 (3d Cir.), cert. denied, 488 U.S. 849, 109 S.Ct. 131, 102 L.Ed.2d 103 (1988); Short v. Belleville Shoe Manufacturing Co., 908 F.2d 1385 (7th Cir.1990), cert. denied, — U.S. -, 111 S.Ct. 2887, 115 L.Ed.2d 1052 (1991). Looking to the limitations periods for analogous federal securities law, the Third Circuit concluded that the statute of limitations for a § 10(b) claim was “one year after the plaintiff discovers the facts constituting the violation, and in no event more than three years after such violation.” Data Access, 843 F.2d at 1550; accord Belleville Shoe, supra. In November 1990, some months after A-plaintiffs commenced their action against Sovereign defendants in New York court, the Second Circuit changed its practice and adopted the federal limitations period set out in Data Access and Belleville Shoe. Ceres Partners v. GEL Associates, 918 F.2d 349, 358-60 (2d Cir.1990). On June 19, 1991 the Supreme Court ended this split in the circuits and embraced a uniform federal statute of limitations period for private actions brought pursuant to § 10(b). Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, — U.S. -, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). The Court in Lampf required that § 10(b) claims be filed within one year after discovery of the violation and absolutely within three years from date of violation. Id. — U.S. at -, 111 S.Ct. at 2781-82. Because A-plaintiffs filed their claim in the midst of this upheaval concerning the limitations period for § 10(b) claims, a question arises as to what statute of limitations applies to their claim. A-plaintiffs argue that the New York statute of limitations for § 10(b) claims as of February 1990 applies, while the Sovereign defendants contend that the uniform federal statute of limitations announced in Lampf and/or Data Access controls. On the same day that the Court decided Lampf, the Court also decided James Beam Distilling Co. v. Georgia, — U.S. -, -, 111 S.Ct. 2439, 2448, 115 L.Ed.2d 481 (1991), concluding that in the civil context “when the Court has applied a rule of law to the litigants in one case it must do so with respect to all others not barred by procedural requirements or res judicata.” In light of James Beam, it was “evident that the retroactive ruling in Lampf [was] to be applied retroactively to all cases not finally adjudicated on the date when Lampf was decided.” Welch v. Cadre Capital, 946 F.2d 185, 187 (2d Cir.1991) (“Welch II’’). In an effort to limit the retroactive application of Lampf, Congress amended the Securities Exchange Act of 1934 on December 19, 1991 by adding after section 27, 15 U.S.C. § 78aa, a new section 27A, 15 U.S.C. § 78aa-I. Under § 27A, Lampf applied only to cases commenced after the day Lampf was decided, June 19, 1991. See Securities Exchange Act of 1934, § 27A, 15 U.S.C. § 78aa-1. Section 27A states: (a) EFFECT ON PENDING CAUSES OF ACTION.—The limitations period for any private civil action implied under 10(b) of this Act that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such existed on June 19, 1991. (b) EFFECT ON DISMISSED CAUSES OF ACTION.—Any private civil action implied under section 10(b) of the Act that was commenced on or before June 19, 1991— (1) which was dismissed as time barred subsequent to June 19, 1991, and (2) which would have been timely filed under the limitation period provided by the laws of applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991, shall be reinstated on motion by the plaintiff not later than 60 days after the date of enactment of this section. Federal Deposit Insurance Corporation Improvement Act of 1991, Pub.L. No. 102-242, § 476, 105 Stat. 2236. See generally Maio v. Advanced Filtration Systems, et al., 795 F.Supp. 1364 (E.D.Pa.1992). Fortunately, this case does not require that I assess the retroactive application of Lampf to A-plaintiffs’ claims. Even assuming A-plaintiffs are covered under § 27A, and assuming further that A-plaintiffs timely filed their § 10(b) claims under the applicable § 10(b) limitations period in the Second Circuit in accordance with § 27A(b), this fact has no bearing ultimately on the timeliness of A-plaintiffs’ § 10(b) claim in Pennsylvania district court. The centerpiece of A-plaintiffs’ argument is their belief that under the Pennsylvania saving clause, 42 Pa.Cons.Stat.Ann. § 5535 (1981), they had a grace period of one year in which to refile their action following the dismissal of their New York action without prejudice. According to A-plaintiffs, they had one year from October 4, 1991 to refile their complaint, and they did so—filing the present complaint in April 1992. However, a state saving clause can not be used to extend a federal limitation period. See 4 C. Wright & A. Miller, Federal Practice and Procedure § 1056, 192-193 (1987). Whether one looks to the date A-plaintiffs filed their New York action (February 1990), or the date the case was dismissed (October 1991), or the date the case was refiled in this court (April 1992), the Third Circuit at all these times applied a federal statute of limitations to § 10(b) claims. See Data Access, supra (decided in 1988). Accordingly, A-plaintiffs’ reliance on § 5535 is unavailing. The only question then is whether A-plaintiffs filed their § 10(b) claim in this court within the federal statute of limitations set out in Data Access. Under Data Access, the statute of limitations for a § 10(b) claim is “one year after the plaintiff discovers the facts constituting the violation, and in no event more than three years after such violation.” 843 F.2d at 1550. Using either time frame, A-plaintiffs did not file their claim in a timely manner. According to A-plaintiffs, they discovered the fraud and false statements in the Sovereign PPM giving rise to the § 10(b) claim in July 1989. Plaintiffs’ Opp. at 21. Since they did not file their complaint with this court until April 1992, A-plaintiffs manifestly did not file within one year from the point of discovery of the facts of the alleged violation. Nor did plaintiffs file the action within three years of the events complained of. Defendants suggest that the date the securities were purchased by investors marks the date of the violation. See Defendants’ Motion to Dismiss Amended Complaint (“Motion to Dismiss”) at 14. Plaintiffs on the other hand suggest that the violation occurred when Sovereign defendants wrote the allegedly false Sovereign PPM. See Plaintiffs’ Opp. at 21-22. Using either date, A-plaintiffs’ § 10(b) claim is untimely. A-plaintiffs state that the alleged § 10(b) violation “commended] in approximately 1984.” Am. Comp, at 66. Given that the renovations were supposed to be completed by 1985, it makes sense that both the sale of the securities and the writing of the Sovereign PPM occurred at least before 1985. Under Data Access, therefore, the, latest'plaintiffs could have filed their § 10(b) claim in Pennsylvania court would have been some time in 1987. Again, A-plaintiffs did not file the present matter until April 1992. In sum, A-plaintiffs’ § 10(b) and Rule 10b-5 claims were not filed within the statute of limitations. Thus, claim I will be dismissed. B. The Fraud Claim Because the allegations of fraud underlie plaintiffs’ RICO claim against defendants, it would be useful at this point to consider the validity of plaintiffs’ common law fraud claim. Plaintiffs allege that the defendants’ conduct with regard to the Sovereign and Crestwood Partnerships constituted fraud (claim III). Although the substance of the alleged fraud is not explicitly delineated by plaintiffs, it appears from the nature of the allegations against defendants that plaintiffs are raising a claim of fraudulent misrepresentation. To state a claim for fraudulent misrepresentation under Pennsylvania law, plaintiffs must plead (1) misrepresentation, (2) fraudulent utterance thereof, (3) intention by the maker that recipient will be induced to act, (4) reasonable reliance by the recipient on the misrepresentation, and (5) injury to recipient as a proximate result. See, e.g. Tunis Bros. Co., Inc. v. Ford Motor Co., 952 F.2d 715, 731 (3d Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 3034, 120 L.Ed.2d 903 (1992). In stating a claim for fraudulent misrepresentation, as compared to negligent misrepresentation, plaintiffs must demonstrate that the misrepresentation was made knowingly or recklessly by defendants. See, e.g. Brindle v. West Allegheny Hospital, 406 Pa.Super. 572, 594 A.2d 766, 768 (1991) (interpreting “fraudulent utterance” element as referring to defendant’s scienter) (citing B.O. v. C.O., 404 Pa.Super. 127, 590 A.2d 313 (1991)). Taking a rather cynical view of plaintiffs’ allegations, defendants suggest that plaintiffs’ claims of fraud are nothing more than fraud by hindsight and should thus be dismissed under Fed.R.Civ.P. 12(b)(6). As defendants view the allegations, plaintiffs realized that defendants’ projections regarding the success of the Sovereign and Crestwood projects were incorrect, and therefore concluded that there must have been fraud. Defendants further argue that where projections are accompanied by document language that “bespeaks caution,” the projections even if incorrect cannot be the basis of a fraud claim. Motion to Dismiss at 33. In the alternative, defendants argue that plaintiffs’ fraud claims should be dismissed pursuant to Fed.R.Civ.P. 9(b) as insufficiently pled. Since the allegations of fraud with respect to the Sovereign Partnership and the Crest-wood Partnership differ, I will address them separately. 1. Sovereign Partnership As an initial matter, I do not agree with defendants’ characterization of plaintiffs’ fraud claim against defendants with respect to the Sovereign Partnership. Upon review of the claims stemming from the Sovereign Building partnership, I am not convinced that they are an example of fraud by hindsight. Plaintiffs are not alleging, as defendants suggest, that the Sovereign PPM understated the potential benefits coming plaintiffs’ way. Rather, in their main allegation of fraud plaintiffs assert that the Sovereign defendants promised to renovate the buildings for a fixed amount while knowing that the renovation would cost more. Am. Comp. at ¶¶ 37(a), 39(a), (b). While it is true that a promise to do something in the future can not serve as a basis for a fraud claim, the “essence of fraud is in the misrepresentation that occurs when a defendant makes a bargain with no intention of living up to it.” American Trade Partners v. A-1 International Importing, 755 F.Supp. 1292, 1301 (E.D.Pa.1990). Since plaintiffs have alleged that defendants had no intention of renovating the Sovereign buildings for the fixed price given in the offering memorandum, plaintiffs have a valid fraud claim with respect to the Sovereign Partnership. Defendants argue that the presence of cautionary language in the Sovereign PPM specifically warning of the risks of construction precludes plaintiffs’ fraud claim. If the facts of this ease were only that defendants’ estimated construction costs went awry, perhaps defendants’, argument would be persuasive. However, defendants were not estimate ing a cost, they were promising a fixed price. The “bespeaks caution” doctrine has no application in the context of broken promises. The ease generally considered seminal with respect to the “bespeaks caution” doctrine, and cited by defendants, is Luce v. Edelstein, 802 F.2d 49, 56 (2d Cir.1986). See In re Donald J. Trump Casino Securities Litigation, 793 F.Supp. 543, 549 (D.N.J.1992) (noting that the First, Second, Sixth, Eighth and Ninth Circuit Courts have adopted the “bespeaks caution” approach of Luce). In Luce, plaintiffs alleged two groups of misrepresentations: one concerned the extent of tax and financial benefits the investors would receive and the other concerned promises made by the general partners to the inves-. tors. As to the first group of misrepresentations, the Luce court concluded: the Offering Memorandum warned prospective investors that “[a]etual results may vary from the predictions and these variations may be material.” We are not inclined to impose liability on the basis of statements that clearly “bespeak caution.” Polin v. Conductron Corp., 552 F.2d 797, 806 n. 28 (8th Cir.), cert. denied, 434 U.S. 857, 98 S.Ct. 178, 54 L.Ed.2d 129 (1977). Luce, 802 F.2d at 56 (citations omitted). But as to the second group of misrepresentations, the court explained: While the failure to carry out a promise made as consideration for a sale of securities may be an element of a Section 10(b) claim, that failure does not constitute fraud if the promise was made with a good faith expectation that it would be carried out. However, ... [pjlausible allegations that defendants made specific promises to induce a securities transaction while secretly intending not to carry them out knowing they could not be carried out, and that they were not carried out, are sufficient ... to state a claim for relief under Section 10(b). Luce, 802 F.2d at 56 (citations omitted) (emphasis added). Thus, despite the presence of cautionary language in the offering memorandum, the Luce court let stand plaintiffs’ securities fraud claim based on the alleged broken promises. Plaintiffs have alleged that defendants knowingly misrepresented to plaintiffs that the construction costs for renovating the Sovereign Partnership project would be fixed, that defendants did so to induce plaintiffs to invest, that plaintiffs reasonably relied on defendants’ representation of costs, and, finally, that they were injured in their ultimate decision to buy the securities and in the lost value of the investment. Having pled (1) misrepresentation, (2) fraudulent utterance thereof, (3) intention by the maker that recipient will be induced to act, (4) reasonable reliance by the recipient on the misrepresentation, and (5) injury to recipient as a proximate result, plaintiffs have stated a claim for fraud. See Tunis, 952 F.2d at 731. Plaintiffs have also claimed fraudulent misrepresentation with respect to the July 1989 letter to investors and the information statement and letter .mailed by Butcher on September 18,1989. Am. Comp, at ¶¶ 38, 40. Plaintiffs contend that within the information statement defendants falsely attributed the Sovereign Partnership’s difficult financial situation to a “soft market,” while omitting to explain that inflated debt payments were the true cause of the Partnership’s weak financial status. Id. In addition, plaintiffs allege that, defendants falsely stated in the July 1989 letter to investors and in the information statement that the limited partner plaintiffs would need to forfeit much of their interest in the partnership and sign a general release form. Am. Comp, at ¶ 38(b). Plaintiffs further state that defendants made the misrepresentations or omissions, hoping to induce plaintiffs’ investment in the project and their consent to a new general partner, and that plaintiffs reasonably relied on the above misrepresentations and omissions. Again, under Tunis, these allegations state a claim for fraud. Alternatively, defendants argue that even if plaintiffs have stated a claim for fraud, the allegations of fraud are inadequately pled under Fed.R.Civ.P. 9(b). In pleading claims of fraud, “the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other conditions of mind of a person may be averred generally.” Fed. R.Civ.P. 9(b). The particularity requirement, however, must be read in conjunction with the liberal pleading rule of Fed.R.Civ.P. 8. As the Third Circuit has noted, “focusing exclusively on its ‘particularity’ language is ‘too narrow an approach and fails to take account of the simplicity and flexibility contemplated by the rules.’ ” Christidis v. First Pennsylvania Mortg. Trust, 717 F.2d 96, 100 (3rd Cir.1983) (quoting 5 C. Wright & A. Miller Federal Practice and Procedure § 1298, at 407 (1968)). Fed.R.Civ.P. 9(b) does not require that plaintiffs plead the exact date, place and time of the alleged fraudulent act. Seville Industrial Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 786, 791 (3rd Cir.1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1179, 84 L.Ed.2d 327 (1985). All that is required is that “plaintiffs plead with particularity the ‘circumstances’ of the alleged fraud in order to place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior.” Id. Using this standard, I find plaintiffs’ allegations of fraud with respect to the Sovereign Partnership to be pled with sufficient particularity. Plaintiffs cite numerous misrepresentations and omissions in the Sovereign PPM, the July 1989 letter to investors, and the September 1989 Information Statement and accompanying letter. Am. Comp. ¶¶ 37-40. Plaintiffs have provided defendants with the specific documents plaintiffs consider to be fraudulent, pinpointed the portions of the documents they believe were misrepresentative, and provided the dates on which most of the documents were distributed. Moreover, as described above, plaintiffs have stated defendants’ purpose in making these misrepresentations and omissions. Accordingly, defendants’ motion to dismiss plaintiffs’ fraud claim with respect to the Sovereign Partnership under Fed.R.Civ.P. 9(b) will be denied. 2. The Crestwood Partnership In support of their claim of fraud with respect to the Crestwood Partnership, plaintiffs have alleged that the assumption underlying the Crestwood PPM financial projection—“that the property would maintain a vacancy/rent loss rate of 5% and that rents would increase 2% over the current rents at the time of offering and increase 7% per year thereafter”—was not reasonable under the circumstances. Am. Comp, at ¶¶ 51, 53. According to plaintiffs, defendants (1) misrepresented the reasonableness of the financial projections, using arbitrary underlying assumptions not related to the project area, Am. Comp, at ¶ 54(a), (c), ¶ 55(b), (c); (2) omitted to note that the vacancy/rent loss rate was 6.6% to 10.8% in the Phoenix metropolitan area (including Mesa), Am. Comp, at ¶ 55(a); and (3) misrepresented to plaintiffs that the financial projections had been reviewed by accountants, when the accountants had been paid a large fee not to do the investigation, Am. Comp, at ¶ 54(b). “The fact that a projection or estimate turned out to be incorrect, standing alone, does not even raise an inference that the statement was fraudulent when made.” Urbach v. Sayles, 779 F.Supp. 351, 358 (D.N.J.1991). However, under Pennsylvania law, a projection that is made without a reasonable basis is an untrue statement and is fraudulent if made knowingly or recklessly. See B.O. v. C.O., 404 Pa.Super. 127, 590 A.2d 313 (1991); In re Craftmatic Securities Litigation, 890 F.2d 628, 645-46 (3d Cir.1989). To support an inference of fraud, plaintiffs must produce evidence tending to establish that defendants lacked a reasonable basis for their estimate. Donald J. Trump Casino Securities Litigation, 793 F.Supp. at 557 (D.N.J.1992) (citing Sinay v. Lamson & Sessions Co., 948 F.2d 1037 (6th Cir.1991); Di-Leo v. Ernst & Young, 901 F.2d 624, 627 (7th Gir.), cert. denied, 498 U.S. 941, 111 S.Ct. 347, 112 L.Ed.2d 312 (1990)). Plaintiffs must submit objective evidence on the basis of which this court could conclude that there was no reasonable basis for defendants’ assumption as to the vacancy/rent loss rate. Plaintiffs have adequately alleged such facts. As stated above, plaintiffs allege that the vacancy/rent loss rate for the Phoenix metropolitan area (including Mesa) was 6.6% to 10.8% in 1984. Although plaintiffs provide no citation for this statistic, and make no effort to provide the vacancy/rent loss rate for the Crestwood project area or Mesa alone, the court is bound in a motion to dismiss to make all reasonable inferences in favor of the nonmovant. Based on the discrepancy between the vacancy/rent loss rate used by defendants in the PPM and the vacancy/rent loss rates cited by plaintiffs, a reasonable juror could infer that the 5% rate assumed by defendants in their financial projections was not reasonable. See Sinay, 948 F.2d at 1040; Donald J. Trump Casino Securities Litigation, 793 F.Supp. at 557. Defendants have argued that the cautionary language in the Crestwood PPM warning of the unreliability of the financial forecast and its underlying assumptions precludes an action for fraud based on the financial projections. Upon review of the cases discussing the “bespeaks caution” approach, it would appear that the doctrine does not apply unless the projection at issue reflects an honestly held belief of the declarant. As the Sixth Circuit described the course of a court’s analysis: In determining whether the statements are actionable, the court must scrutinize the nature of the statement to determine whether the statement was false when made. While analyzing the nature of the statement, the court must emphasize whether the “prediction suggested reliability, bespoke caution, was made in good faith, or had a sound factual or historical basis.” Sinay, 948 F.2d at 1040 (quoting Isquith v. Middle South Utils., Inc., 847 F.2d 186, 204 (5th Cir.), cert. denied, 488 U.S. 926, 109 S.Ct. 310, 102 L.Ed.2d 329 (1988)) (emphasis added). Whereas the 5% vacancy/rent loss rate assumption used by defendants may well be surrounded by language “bespeaking caution,” the objective evidence presented by plaintiffs concerning vacancy rates in the Phoenix metropolitan area could reasonably support an inference that defendants did not choose the vacancy/rent loss rate in “good faith” or “with sound factual or historical basis.” At this stage, then, the “bespeaks caution” doctrine does not necessarily prevent plaintiffs’ fraud claim. In alleging that defendants knowingly issued a projection without a reasonable basis and by supporting that allegation with recitals of assertedly provable objective facts, plaintiffs have stated a claim for fraud with respect to the Crestwood Partnership. See B.O. v. C.O., 404 Pa.Super. 127, 590 A.2d 313 (1991); In re Craftmatic Securities Litigation, 890 F.2d 628, 645-46 (3d Cir.1989). Again, defendants alternatively argue that plaintiffs’ allegation of fraud is insufficiently pled under Fed.R.Civ.P. 9(b). However, with respect to the alleged fraudulent projection, plaintiffs have provided the document, the date of its issuance, the fraudulent statement and the purpose of the fraud. Thus, defendants have more than adequate notice of their alleged misconduct. Plaintiffs have made other allegations of fraud surrounding the Crestwood Partnership that do not withstand scrutiny under Fed.R.Civ.P. 9(b). As noted above, plaintiffs allege in their complaint that the accounting professionals of McGlarrey, Henderson & Pollen, whom defendants note were hired to review the financial projections, agreed for a large sum to approve the financial projections without investigation. Am. Comp, at ¶ 54(b). A conclusory allegation such as this will not satisfy the pleading requirements of Fed.R.Civ.P. 9(b). C. Wright A. Miller, Federal Practice and Procedure § 1297, at 612 (1990). In addition, plaintiffs allege that defendants “withheld relevant information from the Crestwood Apt. plaintiffs over the life of the investment including information concerning the true causes of the partnership problems,” Am. Comp, at ¶ 57, and that “the status reports that plaintiffs did receive failed to paint a true picture of the actual status of the property and falsely attributed any deficiencies to other factors such as the original property manager and an increase in the availability of apartments in Mesa,” Am. Comp, at ¶ 58-60. Both of these allegations are fatally vague and overbroad. The “life of the investment” spanned approximately six years, during which time a number of status reports may have been issued. Plaintiffs do not specify in what context defendants withheld information, what information regarding the “true causes of the partnership problems” was withheld apart from the supposedly inaccurate financial projection, which of the status reports contained misrepresentations and what parts of the status reports were false. Accordingly, aside from plaintiffs’ allegation of fraud with regard to the vacancy/rent loss rate, plaintiffs’ allegations of fraud as to the Crestwood Partnership will be dismissed under Fed.R.Civ.P. 9(b). C. The RICO claim In count II of their amended complaint, plaintiffs have raised a civil RICO action, alleging that defendants: derived income directly or indirectly through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(a), Am. Comp, at ¶77; participated or agreed to participate in the conduct of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c), Am. Comp, at ¶ 78; and conspired to violate § 1962(a) and § 1962(c), in violation of 18 U.S.C. § 1962(d). Defendants raise a number of arguments to defeat plaintiffs’ RICO claim: (1) the RICO claim is time-barred; (2) the underlying fraud claims are inadequately pled under Fed.R.Civ.P. 9(b); (3) plaintiff has failed to state a RICO claim; and (4) plaintiffs lack standing to bring a RICO claim since they have not suffered an injury to property or business. I will address each argument in turn. 1. The statute of limitations A RICO cause of action accrues when “the plaintiff knew or should have known of the last injury or the last predicate act which is part of the same pattern of racketeering.” Keystone Ins. Co. v. Houghton, 863 F.2d 1125,1126 (3d Cir.1988). Once the claim has accrued, the statute of limitations for a RICO cause of action is four years. Agency Holding Corp. v. MalleyDuff & Associates, Inc., 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987). From the face of the amended complaint, the last predicate act occurred in September 1989 when Butcher mailed the information statement to the investors and suggested that a release needed to be signed. Plaintiffs filed their RICO claim well within four years of September 1989. 2. Fed.R.Civ.P. 9(b) Defendants next challenge plaintiffs’ ' RICO claim under Fed.R.Civ.P. 9(b). The offenses which, according to plaintiffs, constitute a pattern of racketeering include federal securities, mail, and wire fraud—all of which must be pled with particularity in compliance with FediR.Civ.P. 9(b). ' See Alfaro v. E.F. Hutton & Co., Inc., 606 F.Supp. 1100, 1118 (E.D.Pa.1985). The allegations of securities fraud on which the RICO claim is partially based is derived from plaintiffs’ common law fraud pleadings with regard to the Sovereign PPM. For the same reason this court, found the common law fraud pleading sufficient with regard to the Sovereign offering memorandum, the court believes the allegation of securities fraud is sufficiently pled under Fed. R.Civ.P. 9(b). Because a RICO claim requires a “pattern of racketeering” activity, plaintiffs must properly plead at least two acts of racketeering for the RICO claim to stand under Fed.R.Civ.P. 9(b). Alfaro, 606 F.Supp. at 1118-1119. Along with securities fraud, plaintiffs have alleged mail and wire fraud. The amended complaint reads: 71. In addition to the racketeering activity under § 1961(1)(D) with regard to the fraudulent sale of securities, defendants engaged in racketeering activity under § 1961(1)(B) through the commission of acts of mail fraud in violation of 18 U.S.C. § 1341 and acts of wire fraud in violation of 18 U.S.C. § 1343 as follows: (1) the offering Memoranda and accompanying offering materials; (2) the Subscription Agreements by which investors made their investments in the Partnerships; (3) the Promissory Notes executed by investors and the defendants in connection with the investments; (4) the annual “reminder” notices sent by the defendants to the investors regarding payment of the Promissory Notes; (5) the annual payments made by investors to the defendants and the return of the Promissory Notes by the defendants; (6) the annual Report on Examination of Financial Statements and Additional Information prepared by the accounting defendant; (b) Upon information and belief, defendants used and caused to be used interstate wire communications in furtherance of their scheme to defraud, in violation of 18 U.S.C. § 1343, by communicating among themselves and with third parties on numerous occasions throughout the course of the fraudulent scheme and continuing to the present day. 72. The statements made upon information and belief in the preceding paragraph are based on the following facts: (a) that the defendants syndicated, along with these two partnerships, at least 13 other limited partnerships involving hundreds of investors, including among others; (1) Sovereign Group 1986-1, d/b/a Coral Gables Biltmore; (2) Sovereign Group 1986-24, d/b/a Denver Brewery Associates; (3) Gateway Radio Partners Limited Partnership. (b) that the properties involved were located in many different states, such as the Crestwood Apartments in Arizona, the Sovereign Building in Pennsylvania, and the Gateway Radio Partners Partnership involving a radio station in Illinois; (c) that the hundreds of investors in the partnerships sponsored by the defendants reside in numerous different states throughout the country, such as those listed as plaintiffs in this action on Exhibits A and B; (d) that the scope of the defendants’ activities in promoting the “investments,” as reflected above could only have been carried out through extensive use of the mails and interstate wire communications. The facts regarding the specific occasions on which the defendants used the mails and wire communications are uniquely within the knowledge of the defendants; (e) that the defendants repeatedly advised investors to call their Manager of Investor Services, using a New York or “800” telephone exchange, if they had any questions. With some hesitation, I find that plaintiffs’ mail fraud claim is sufficiently pled. In paragraph 71(a)(1), plaintiffs contend that defendants used the mails to distribute offering memoranda and the accompanying documents. While this reference may be vague standing alone, defendants can discern the particularities of the alleged mail fraud from the remainder of plaintiffs’ amended complaint. Specifically, defendants can determine that plaintiffs are referring to the use of the mails to distribute the Sovereign PPM and the Crestwood PPM. From this, defendants are aware of the documents in which the alleged fraud occurred, the content of the alleged fraud and the dates of the documents’ issuance. I would note that I do not find plaintiffs’ allegations of mail fraud sufficiently pled with respect to the other documents cited. Plaintiffs have provided no details about these documents, such as the dates of their issuance, the persons mailing the documents, the persons receiving the documents, the content of the documents, or the properties to which the documents pertain. Since plaintiffs have pled two of the alleged racketeering acts with specificity, this court finds the RICO claim to be sufficiently pled under Fed.R.Civ.P. 9(b). 3. Failure to State a Claim Defendants argue that plaintiffs’ RICO claim must be dismissed for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Defendants raise five grounds for dismissal: 1. Plaintiffs fail to plead the requisite racketeering acts; 2. Plaintiffs fail to allege that they were injured by reason of defendants’ alleged investment or use of the proceeds of racketeering activity; 3. Plaintiffs have not properly identified any enterprise whose affairs defendants allegedly conducted through a pattern of racketeering activity; 4. Plaintiffs fail to plead the existence of a “pattern” of racketeering activity; and 5. Plaintiffs fail to plead the elements of the RICO conspiracy they allege. I will address each of defendants’ arguments. a. failure to plead predicate acts In plaintiffs’ amended complaint, they allege numerous predicate acts of securities and mail fraud. To state a 10b-5 claim, plaintiffs must allege that: 1) a security was sold or purchased accompanied by a misrepresentation or omission of material fact; 2) defendants] acted with scienter; 3) the plaintiff justifiably relied on such a misrepresentation in connection with the purchase or sale of a security; and 4) the plaintiff suffered damage as a result of the misrepresentation or omission. Sowell v. Butcher & Singer, Inc., 926 F.2d 289, 296 (3d Cir.1991). Upon review of the amended complaint, I find that plaintiffs have stated a claim of federal securities fraud. Plaintiffs have alleged that defendants misrepresented the amount of the construction costs in the Sovereign PPM with the intent to deceive plaintiffs into investing in the project, that plaintiffs reasonably relied on the misrepresentations, and that plaintiffs were damaged as a result of their investment. Am. Comp, at ¶¶ 37-42, 68. Similarly,' I find that plaintiffs have stated a claim for mail fraud. Plaintiffs have alleged (l) the existence of a scheme to defraud, (2) defendants’ participation in the scheme with the intent to defraud the investors, and (3) use of the mails of the United States to further the scheme. United States v. Burks, 867 F.2d 795, 797 (3d Cir.1989). b. Plaintiffs’ injury by reason of defendants’ alleged investment or use of the proceeds of racketeering activity Under'§ 1962(a), it is unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity ... to use or invest, directly or indirectly, any part of such income, in the acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. 18 U.S.C. § 1962(a) (1988). To have standing under § 1962, the plaintiff must have suffered an injury as a result of the conduct that constitutes the RICO violation. Sedi ma, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496-97, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985). In the case of a claim arising under § 1962(a), [the RICO violation] occurs not when the defendant engages in predicate acts, but only when he uses or invests the proceeds of that activity in an enterprise. Consequently, to recover under § 1962(a), the plaintiff must demonstrate that his injuries were proximately caused by that violation. Brittingham v. Mobil Corp., 943 F.2d 297, 304 (3d Cir.1991) (emphasis added). In other words, the § 1962(a) plaintiff must allege a use or investment injury. As the Third Circuit noted, “requiring the allegation of use or investment injury ‘is consistent with both the literal language and fair import of the language [of § 1962(a) ].’ ” Rose v. Battle, 871 F.2d 331, 358 (3d Cir.1989) (citations omitted). Whereas plaintiffs properly state a § 1962(a) violation—asserting that defendants used and invested money derived from a pattern of racketeering activity in various enterprises, Am. Comp. ¶ 77—plaintiffs fail to describe any injury suffered by them as a result of that violation. In ¶80, plaintiffs describe their injury as follows: By reason of the violations of 18 U.S.C. § 1962(a), (c) and (d), plaintiff and the class have been financially injured in their business and property by the amount of their funds “invested”, -plus lost use of the money invested, and consequential damages. Their investments in the partnerships had little, if any economic value at the time they were made, and are now worthless. This is not the type of injury contemplated under § 1962(a). Section 1962(a) provides a cause of action for those injuries precipitated by defendant’s use and reinvestment of proceeds in various enterprises. Plaintiffs have described an injury in terms of their own use of and investment. In their legal memoranda, plaintiffs contend that their statement of injury may also be found in ¶ 77 of their Amended Complaint, which states: The defendants are or were principals (within the meaning of 18 U.S.C. § 2) in one or more of the above-described enterprises and have derived income, directly or indirectly, from a pattern of racketeering activity, part of which they have invested in the various enterprises, to continue promoting, organizing and operating the Partnerships. Such conduct constitutes a violation of 18 U.S.C. § 1962(a). While this allegation may state a claim under § 1962(a), it again does not allege an injury to plaintiffs as a result of the alleged § 1962(a) violation. Since plaintiffs have not demonstrated an injury caused by defendants’ use or investment of money defrauded from plaintiffs, plaintiffs have not established standing to bring a § 1962(a) claim. Accordingly, plaintiffs’ § 1962(a) claim will be dismissed, c. Existence of an enterprise Under § 1962(c) It shall be unlawful for any person employed by or. associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity ... 18 U.S.C. § 1962(c) (1988). Defendants argue that plaintiffs “have not properly identified any enterprise whose affairs defendants allegedly conducted through a pattern of racketeering activity.” Motion to Dismiss at 48. Under 18 U.S.C. § 1961(4), the term “enterprise” “includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” Plaintiffs allege the existence of two enterprises. First, plaintiffs plead an association-in-faet, alleging that “the group of individuals and entities employed by or associated in fact in the business of organizing, promoting, and selling of investments in the partnership and the subsequent management of the operation of the partnerships” is an enterprise under § 1962(e). Am. Comp.' at ¶ 74. In ¶ 75 plaintiffs state that the “defendants are an ‘enterprise.’ ” Because plaintiffs do not use the words “associated in fact” to describe the second enterprise, this court will assume that plaintiffs intend to plead the second enterprise as a legal entity. In B.F. Hirsch v. Enright Refining Co., Inc., 751 F.2d 628, 633-34 (3d Cir.1984), the Third Circuit stated that under § 1962(c), the “enterprise” and the “person” charged with the RICO violation must be distinct entities. The court found that because the “enterprise” and the “person” were the same in B.F. Hirsch —Enright Refining Company, Inc.—a § 1962(c) claim was untenable. Working from the language of § 1962(c), the court stated: The Enright Refining Company, Inc. clearly is not employed by the Enright Refining Company, Inc.; nor is it logical to say that the Enright Refining Company, Inc. is associated with the Enright Refining Company, Inc. Thus, the language contemplates that the “person” must be associated with a separate “enterprise” before there can be RICO liability on the part of the “person.” Enright, 751 F.2d at 633. Plaintiffs’ second enterprise cannot stand up under the Enright rule requiring separation of the “person” and “enterprise.” In treating the group of defendants as a single legal entity, plaintiffs have pled an enterprise indistinguishable from that pled in Enright. See Glessner v. Kenny, 952 F.2d 702, 710 (3d Cir.1991). Like the Enright Refining Company, Inc., the present defendants when viewed as , a single entity are both the “person^)” perpetrating the RICO violation and the “enterprise.” Accordingly, the § 1962(c) claim against the enterprise of the defendants is improper. The other enterprise alleged by plaintiffs is the association-in-faet of all those involved in the supposedly unlawful real estate scheme, including, this court assumes, defendants and others. This theory of the enterprise presents a slightly more complicated situation. To the extent that this other enterprise is comprised of defendants, one might expect it poses an Enright problem similar to the second enterprise. However, it appears that where the enterprise of defendants is pled as an association-in-fact, as opposed to as a single legal entity, several courts have permitted the § 1962(c) claim to stand. For example, in Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1165-66 (3d Cir.1989), the Third Circuit found that the association-in-faet of three defendant corporations stated a valid § 1962(c) enterprise. See also Yellow Bus Lines, Inc. v. Local Union 639, 839 F.2d 782, 791 (D.C.Cir.1988) (citing Cullen v. Margiotta, 811 F.2d 698, 729-30 (2d Cir.), cert. denied sub nom. Nassau County Republican Committee v. Cullen, 483 U.S. 1021, 107 S.Ct. 3266, 97 L.Ed.2d 764 (1987)). This is not to say that a plaintiff may circumvent Enright simply by pleading an association-in-fact where the enterprise is in actuality a legal entity. The Third Circuit addressed this potential escape route in Brittingham. In Brittingham, plaintiffs brought a § 1962(c) claim against Mobil Corporation and Mobil Chemical Company for the production and marketing of supposedly degradable garbage bags that did not in fact degrade. Mobil Chemical Company was an unincorporated division of Mobil Oil Corporation, which was a wholly owned subsidiary of Mobil Corporation. Plaintiffs defined the enterprise as Mobil, Corporation, Mobil Chemical and the advertising agencies who helped in the marketing of the garbage bags. Citing Enright, the Third Circuit found that the “enterprise” and “person(s)” in Brittingham were not distinct. The court explained: a § 1962(c) enterprise must be more than an association of individuals or entities conducting the normal affairs of a defendant corporation. A corporation must always act through its employees and agents, and any corporate act will be accomplished through an “association” of these individuals or entities.... Therefore, we must examine the enterprise allegation to determine whether it is no more than an association of individuals or entities acting on behalf of a defendant corporation. Brittingham, 943 F.2d at 301. The court observed that when a defendant is a collective entity, as opposed to an individual, “it is more likely that the alleged enterprise is in reality no different from the association of individuals or entities that constitute the defendant or carry out its actions.” Id. 943 F.2d at 302. The court concluded that the case had an Enright problem since plaintiffs did not allege or present evidence that the defendant corporations, “in contrast to individuals or entities acting on their behalf, took a distinct role in the alleged racketeering activity.” Id. 943 F.2d at 303. The fact that plaintiffs included the advertising firms in the alleged enterprise did not affect the court’s determination since the firms were but agents of the defendant corporation. Id. 943 F.2d at 303. Defendants here contend that plaintiffs’ theory of the enterprise as an association-in-fact must be rejected under Enright and Brittingham. According to defendants, plaintiffs have failed to plead an association-in-fact that is distinct from the defendant corporations, their agents and affiliates. It is a tricky business to distinguish being associated-in-fact in a common enterprise from being “affiliated.” As would necessarily be the case in an association-in-fact enterprise, defendant members of the enterprise are related to one another and are working together in pursuit of a “common purpose.” U.S. v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 252