Roma Const. Co., Inc. v. aRUSSO, Civ. A. No. 94-0448B.

Citation906 F. Supp. 78
Decision Date03 October 1995
Docket NumberCiv. A. No. 94-0448B.
PartiesROMA CONSTRUCTION COMPANY, INC. and Peter Zanni v. Ralph aRUSSO; Benjamin Zanni; Domenic DeConte; Vincent Iannazzi; Anthony Izzo; John Doe; Richard Roe; Town of Johnston; XYZ Assoc.; and Others Yet Unknown.
CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island

Ina P. Schiff, Providence, RI, Henry Spaloss, Nashua, NH, for Plaintiffs: Roma Construction Co., Peter Zanni.

Julius C. Michaelson, Samuel D. Zurier, Michaelson & Michaelson, Providence, RI, Thomas A. DiLuglio, Johnston, RI, for Defendant: Ralph R. aRusso.

William P. Devereaux, Robin-Lee Main, McGovern, Noel & Benik, P.C., Providence, RI, Thomas A. DiLuglio, Johnston, RI, for Defendant: Domenic DeConte.

Thomas A. DiLuglio, Johnston, RI, for Defendant: Benjamin R. Zanni.

Amato A. DeLuca, Mandell DeLuca & Schwartz, Providence, RI, Thomas A. DiLuglio, Johnston, RI, for Defendant: Vincent Iannazzi.

C. Russell Bengston, Carroll, Kelly & Murphy, Providence, RI, Richard C. Tallo, Cranston, RI, Thomas DiLuglio, Johnston, RI, for Defendant: Anthony Izzo.

Marc DeSisto, Kathleen M. Powers, DeSisto Law Offices, Providence, RI, Thomas DiLuglio, Johnston, RI, for Defendant: Town of Johnston.

OPINION

FRANCIS J. BOYLE, Senior District Judge.

Defendants, the Town of Johnston and Ralph aRusso, moved to dismiss the amended verified complaint pursuant to Fed. R.Civ.P. 12(b)(6). The Court referred the motion to a Magistrate Judge for a Report and Recommendation. The Magistrate Judge issued his Report on April 18, 1995, recommending that the motion to dismiss be granted and that Rule 11 sanctions be imposed on plaintiffs and plaintiffs' counsel. This Court heard Plaintiffs' objection to the Magistrate's Report and Recommendation. At that time the Court requested that the parties submit supplemental memoranda addressing the legislative history of the Racketeer Influenced and Corrupt Organizations Act (RICO). The Magistrate Judge also issued a second Report and Recommendation in which he recommended that the Motion to Dismiss submitted by Dominic DeConte should be granted as to all defendants. After consideration of the memoranda and argument, the Court adopts the recommendation of the Magistrate Judge that the complaint be dismissed as to all defendants. Rule 11 sanctions, however, will not be imposed.

I. FACTS

Because this is a motion pursuant to Fed. R.Civ.P. 12(b)(6) for failure to state a claim, the facts are drawn from the verified amended complaint and in the light most favorable to the plaintiffs. See Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir. 1990). The facts, in accord with this standard, may be stated as follows.

Plaintiff, Roma Construction Company, is a Florida Corporation whose chairman is Anthony Compagnogne. Plaintiff, Peter Zanni, is a developer residing in Rhode Island.

In 1986, Harry and Russell DePetrillo were in the process of acquiring property in the Town of Johnston called Oak Hill Estates. They planned to develop this property into a residential subdivision which would ultimately comprise 50 homes and have an expected value of $5 million. Early in this venture, upon seeking certain approvals and reviews, the DePetrillos encountered problems with officials employed by the Town of Johnston. After a meeting with some of the defendant officials, the DePetrillos agreed to pay a $40,000 bribe in $10,000 installments in order to secure the timely grant of all necessary approvals from the town.

Sometime in 1986, plaintiffs Peter Zanni and Roma Construction Company entered into a partnership agreement with the DePetrillos whereby the plaintiffs obtained a two-third's interest in the Oak Hill Properties. In December of 1990, the plaintiffs received approval from the Rhode Island Department of Environmental Management for the Oak Hill property. This approval was a prerequisite for its application to the Town of Johnston for further sewer and water permits. Although the plaintiffs satisfactorily completed this application to the Town of Johnston in early 1991, defendant Iannazzi, a town official, refused to sign this application for several months.

It was at this point that the plaintiffs became aware of the DePetrillos agreement to pay bribes to the defendants in return for their cooperation. Thereafter, plaintiff Peter Zanni met with defendant Benjamin Zanni, a member of the Johnston town council. Benjamin Zanni informed him that $40,000 was outstanding on the bribe. Plaintiff Peter Zanni agreed to continuing bribing the town officials by making $10,000 installments. After the first of the installments was paid, defendant Iannazzi signed the sewer and water application.

In July of 1991, plaintiff Peter Zanni's attorney requested $10,000 to bribe Johnston town officials in order to secure official approval of another development project at Belknap Farms. Peter Zanni paid this bribe and approval for the Belknap Farms development was given in August of 1991.

This scenario was repeated in late 1991. Plaintiffs were having a difficult time obtaining town permission for a certain manhole for the Oak Hill development. Plaintiff Peter Zanni called defendant Benjamin Zanni and was told that approval had not been forthcoming until another $10,000 installment was paid. Peter Zanni paid this amount and the next day the manhole was approved.

In the Fall of 1992, defendant Anthony Izzo asked an Oak Hill Partnership employee Mike Casale for the next bribe installment of $10,000. Izzo repeated this request to Casale in the Spring and Summer of 1993.

In November of 1993, the plaintiffs sold almost all of their assets in the Oak Hill Partnership. On August 29, 1994, plaintiffs filed this action against the defendants seeking damages for the diminution in value of their interests in the Oak Hill Estates property as well as exemplary damages, attorney's fees and costs pursuant to the RICO Act.

II. ANALYSIS
A. Fed.R.Civ.P. 12(b)(6) Standard.

A civil complaint seeking money damages should not be dismissed for failure to state an actionable claim unless it plainly appears that the plaintiffs can prove no set of facts which would entitle them to recover. See Miranda v. Ponce Federal Bank, 948 F.2d 41, 44 (1st Cir.1991), citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). Furthermore, the question must be resolved in the light most favorable to the plaintiffs with any doubt resolved on their behalf. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).

B. The Purpose of the Racketeer Influenced and Corrupt Organizations Act.

Section 1964, Title 18 of the United States Code provides that "any person injured in his business or property by reason of violation of ... the RICO statute ... may sue therefor in a United States district court and shall recover threefold damages ..." Although this may appear to create a private action without limitations, for any person injured by such a violation, this Court must consider whether Congress intended such an open ended meaning. See Holmes v. Securities Investor Protection Corp. et al., 503 U.S. 258, 265-66, 112 S.Ct. 1311, 1316-17, 117 L.Ed.2d 532 (1992); Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 529-30, 103 S.Ct. 897, 903-04, 74 L.Ed.2d 723 (1983). As the Supreme Court stated in Price Waterhouse v. Hopkins, 490 U.S. 228, 241, 109 S.Ct. 1775, 1786, 104 L.Ed.2d 268 (1989): "We need not leave our common sense at the doorstep when we interpret a statute."

The language and the legislative history of the RICO Act, codified at 18 U.S.C. § 1961 et seq., illustrate that Congress intended that RICO both eradicate "`organized crime from the social fabric' by divesting `the association of the fruits of the ill-gotten gains'", Genty v. Resolution Trust Corp., 937 F.2d 899, 910 (3rd Cir.1991), quoting United States v. Turkette, 452 U.S. 576, 585, 101 S.Ct. 2524, 2530, 69 L.Ed.2d 246 (1981), and to provide innocent victims with proper redress. See Organized Crime Control: Hearings on S.30 Before the Subcomm. No. 5 of the House Committee on the Judiciary, 91st Cong., 2nd Sess. 519-520 (1970) (statement of Hon. Sam Steiger, U.S. Rep.).

Through RICO, Congress granted certain powers to the United States District Courts which allowed the seizure of ill-gotten property and the forced divestment of interests in similar activities as well as the award of treble damages. See 18 U.S.C. §§ 1963, 1964 (1984). The legislative history also shows that Congress intended not only to strike at the wrongdoers but to protect the innocent and provide them with adequate compensation. Although it appears that Congress did not consider the exact circumstances that now face the Court, it is clear from the record that the civil remedies provided by the statute were designed to protect innocent parties only.

The RICO statute was passed by both houses of Congress as part of the Organized Crime Control Act of 1970 (O.C.C.A.), P.L. 91-452. The "Findings and Purpose" of the Organized Crime Bill states that "Congress finds that ... organized crime activity in the United States ... harms innocent investors and competing organizations." S. 30, 91st Cong., 2d Sess. (1970). Moreover, the sponsor of the provision that eventually created a private civil remedy, Rep. Samuel Steiger, stated, "I want to make it very clear that the record we are making here is a record of significance. It is the intent of this body, I am certain, to see that innocent parties who are the victims of organized crime have a right to obtain proper redress." 116 Cong. Rec. H35346-47 (Oct. 7, 1970) (statement of Rep. Steiger).

C. The Plaintiffs Are Not Innocent Victims

Plaintiffs strenuously argue that they fit within the class of persons meant to be protected by the RICO statute; that they are victims of an extortion scheme to which they had no viable alternative but to comply and that this...

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2 cases
  • Roma Const. Co. v. aRusso
    • United States
    • U.S. Court of Appeals — First Circuit
    • February 8, 1996
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  • L.L. Nelson Enters., Inc. v. Cnty. of St. Louis
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • March 9, 2012
    ...rights,” but [673 F.3d 806] ruled that once the citizen voluntarily paid the bribe, he waived any future right to sue under § 1983. 906 F.Supp. 78, 84 (D.R.I.1995). The court of appeals reversed, concluding that a reasonable jury could infer that the plaintiffs were “innocent victims of a c......

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