Roma Const. Co. v. aRusso, 95-2107

• Citation: 96 F.3d 566
• Decision Date: 08 February 1996
• Docket Number: No. 95-2107,95-2107
• Parties: , RICO Bus.Disp.Guide 9125 ROMA CONSTRUCTION COMPANY and Peter Zanni, Plaintiffs--Appellants, v. Ralph R. aRUSSO, et al., Defendants--Appellees. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 566

96 F.3d 566

65 USLW 2236, RICO Bus.Disp.Guide 9125

ROMA CONSTRUCTION COMPANY and Peter Zanni, Plaintiffs--Appellants, v. Ralph R. aRUSSO, et al., Defendants--Appellees.

No. 95-2107.

United States Court of Appeals, First Circuit.

Heard Feb. 8, 1996.

Decided Sept. 27, 1996.

G. Robert Blakey, New York City, with whom Ina P. Schiff, Providence, RI, Henry F. Spaloss and Spaloss & Rosson, Nashua, NH, were on brief, for plaintiffs-appellants.

Kathleen M. Powers, with whom Marc DeSisto and DeSisto Law Offices, Providence, RI, were on brief for defendant-appellee Town of Johnston.

Samuel D. Zurier, with whom Julius C. Michaelson and Michaelson & Michaelson, Providence, RI, were on brief, for defendants-appellees aRusso, et al.

Before TORRUELLA, Chief Judge, and CYR and LYNCH, Circuit Judges.

TORRUELLA, Chief Judge.

Plaintiffs-Appellants Roma Construction Co, Inc. ("Roma") and Peter Zanni ("Peter Zanni") (collectively, "the plaintiffs"), challenge the district court's dismissal of their claims against Defendants-Appellees Mayor Ralph R. aRusso ("aRusso"), Councilman Benjamin Zanni ("Benjamin Zanni"), Domenic DeConte, Vincent Iannazi, Anthony Izzo, et al. (collectively, "the individual defendants"), and the Town of Johnston, Rhode Island ("the Town") (together with the individual defendants, "the defendants"). Specifically, the district court granted judgment on the pleadings regarding: (1) Roma's racketeering claims against the individual defendants and the Town under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964(a), and R.I. Gen. Laws § 7-15-1 et seq. ("state RICO"); and (2) Roma's civil rights claims against the individual defendants and the Town under 42 U.S.C. § 1983. Roma also challenges the district court's decision to deny the pro hac vice admission of attorney G. Robert Blakey ("Blakey"). For the following reasons, we reverse the dismissal of the RICO, state RICO and civil rights claims, reverse the district court's decision not to admit Blakey, and we remand for further proceedings in accordance with this opinion.

I. BACKGROUND

We review dismissals pursuant to Fed.R.Civ.P. 12(b)(6) under the rubric that all reasonable inferences from properly pleaded facts are to be drawn in the plaintiffs' favor. Perez-Ruiz v. Crespo-Guillen, 25 F.3d 40, 42 (1st Cir.1994); Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989).

Drawing all reasonable inferences for the plaintiffs, the tale proceeds as follows. The plaintiffs Peter Zanni and Roma entered into a real estate development venture with Harry and Russell DePetrillo ("the DePetrillos"). Unknown to the plaintiffs, the DePetrillos had entered into an arrangement with the alleged de facto government of the Town, with aRusso as "the Boss," under which payments would be made to this enterprise in order to obtain necessary approvals. After the DePetrillos sold their share, Peter Zanni was informed of this preexisting deal, and was warned that his project was "dead" if he did not make payments. Having invested heavily in the project, and reasonably believing that he was dealing with a racketeering enterprise that had extorted and stolen for years during its control of the Town, Peter Zanni paid up. He continued paying for three years, until he was able to sell his share of the development. He then informed the FBI, and cooperated with its investigation and later with prosecutions of official corruption in the Town.

Peter Zanni and Roma brought federal and state civil racketeering claims and federal civil rights claims, charging that they were injured by the conduct of aRusso and his fellow individual defendants, as well as the Town. The district court dismissed these charges on the grounds that the plaintiffs' own conduct rendered them unable to maintain standing to press their claims. The plaintiffs appeal the dismissals of their racketeering ¹

¹ and civil rights claims, as well as the district court's decision to deny the pro hac vice admission of their desired counsel, G. Robert Blakey ("Blakey").

II. DISCUSSION

We address first the plaintiffs' challenge to the dismissals of their causes of action, and then confront their appeal of the district court's decision to deny admission to Blakey.

A. Causes of Action

After setting forth the applicable standard of review, we turn first to the plaintiffs' challenge to the district court's dismissal of their racketeering claims. We then shift to the issue of the plaintiffs' section 1983 claims.

1. Standard of Review

Upon considering a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), the district court should not grant the motion unless it appears to a certainty that the plaintiff would be unable to recover under any set of facts. Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746, 96 S.Ct. 1848, 1853, 48 L.Ed.2d 338 (1976); Gonzalez-Bernal v. United States, 907 F.2d 246, 248 (1st Cir.1990). We review under the same standard, Holt Civic Club v. City of Tuscaloosa, 439 U.S. 60, 66, 99 S.Ct. 383, 387-88, 58 L.Ed.2d 292 (1978).

2. The Racketeering Claims

RICO creates a civil remedy for "[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter." 18 U.S.C. § 1964(c). Subsection (c) of section 1962, in turn, declares that it is 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 or collection of unlawful debt." Id. § 1962(c). An "enterprise" is defined to include "any individual, partnership, corporation, association or other legal entity, and any union or group of individuals associated in fact although not a legal entity." Id. § 1961(4). "Racketeering activity" includes any one of a number of enumerated criminal acts indictable under federal or state law. See id. § 1961(1). A " 'pattern of racketeering activity' requires at least two acts of racketeering activity ... the last of which occurred within ten years ... after the commission of a prior act of racketeering activity." Id. § 1961(5).

The district court dismissed the plaintiffs' civil RICO claims on the ground that, by their own pleadings, plaintiffs were not innocent victims and therefore could not maintain civil RICO standing. The district court found support for the proposition that only innocent victims could collect damages via civil RICO in the legislative history of the provision. See Organized Crime Control: Hearings on S. 30 Before the Subcomm. No. 5 of the House Committee on the Judiciary, 91st Cong., 2d. Sess. (1970) (stating, in the Act's "Findings and Purpose," that "Congress finds that ... organized crime activity in the United States harms innocent investors and competing organizations"); 116 Cong. Rec. H35,346-47 (Oct. 7, 1970) (statement of Rep. Steiger, the private civil remedy provision's sponsor) ("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."). The district court's reasoning can be better delineated in conjunction with a recitation of plaintiffs' claims. Drawing inferences in favor of the plaintiffs, their pleadings suggest the following situation. The plaintiffs joined the DePetrillos in a real estate venture, unaware that the DePetrillos had entered into a scheme in which regulatory approvals had already been granted in exchange for the DePetrillos' payment of $10,000 to aRusso and his purported associates. The plaintiffs were similarly unaware that the DePetrillos had agreed to pay an additional $40,000. Several years later, defendant Looking at these contentions, one reasonable conclusion is that the plaintiffs made these payments without any intent or desire to subvert governmental processes, but felt compelled to pay to protect their substantial investment in the venture, and did not contact the FBI until they had mitigated risks to their investment. However, the district court concluded that, even under this favorable view of the plaintiffs' conduct they could not be considered innocent parties, and so could not, according to the district court's interpretation of RICO standing, maintain a civil RICO claim. The district court concluded that, since the plaintiffs' own pleadings indicate that they paid $40,000 to the individual defendants to assure timely processing of permits and approvals necessary for their project, the plaintiffs were "neither innocent nor victims." Roma Constr. Co. v. aRusso, 906 F.Supp. 78, 82 (D.R.I.1995).

                Councilman Benjamin Zanni approached them for the purported "balance due."   As the district court emphasized, the plaintiffs then faced a dilemma.  They could refuse to pay, jeopardizing their $2 million investment in the project, and as the district court suggested was their obligation, go immediately to the authorities.  Or, they could submit to this extortion to protect their investment.  They chose the latter route.  The plaintiffs state that they complied with all rules and regulations, and did not seek preferential treatment, but paid to avoid threatened adverse consequences.  Specifically, the plaintiffs point to Benjamin Zanni's alleged statement to Plaintiff Peter Zanni that the venture was "dead" unless the balance was paid.  Three years later, after they sold their partnership interests in the venture, the plaintiffs contacted the FBI, and assisted agents in a sting operation
                

The plaintiffs challenge the district court's dismissal of their civil RICO claims on the pleadings. Plaintiffs dispute that there is any "innocent party" requirement under RICO. In the alternative, the plaintiffs contend that, even assuming such an "innocent party" requirement, the district court erred as a matter of law in concluding,...