Standard Chlorine of Delaware, Inc. v. Sinibaldi, Civ.A. No. 91-188-SLR.

• Decision Date: 30 December 1992
• Docket Number: Civ.A. No. 91-188-SLR.
• Citation: 821 F. Supp. 232
• Court: U.S. District Court — District of Delaware
• Parties: STANDARD CHLORINE OF DELAWARE, INC., Plaintiff v. Anthony R. SINIBALDI, Michael O. Sinibaldi, Dover Steel Company, Inc., Comma Corporation, Lorraine Rental & Equipment Co., Inc., Delaware Rental Co., SS & H Realty, SHS Holding Corp., A.M.B. Construction Co., Inc., All-American Promotions, Inc., George Mantakounis, and Mantas Painting Company, Defendants.

821 F. Supp. 232

STANDARD CHLORINE OF DELAWARE, INC., Plaintiff v.Anthony R. SINIBALDI, Michael O. Sinibaldi, Dover Steel Company, Inc., Comma Corporation, Lorraine Rental & Equipment Co., Inc., Delaware Rental Co., SS & H Realty, SHS Holding Corp., A.M.B. Construction Co., Inc., All-American Promotions, Inc., George Mantakounis, and Mantas Painting Company, Defendants.

Civ.A. No. 91-188-SLR.

United States District Court, D. Delaware.

December 30, 1992.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Richard D. Allen, and Karen L. Pascale, of Morris, Nichols, Arsht & Tunnell, Wilmington, DE, for plaintiff.

Aubrey B. Lank, and Brian A. Sullivan, of Theisen, Lank, Mulford & Goldberg, Wilmington, DE, for defendantsAnthony R. Sinibaldi, Michael O. Sinibaldi, Comma Corp., Lorraine Rental & Equipment Co., Inc., Delaware Rental Co., SS & H Realty, SHS Holding Corp., A.M.B. Const. Co., Inc., and All-American Promotions, Inc.; Henry F. Siedzikowski, Brian P. Kenney, Timothy T. Myers, and Frederick P. Santarelli, of Elliott, Vanaskie & Riley, Blue Bell, PA., of counsel.

Richard Galperin, of Morris, James, Hitchens & Williams, and Aubrey B. Lank, and Brian A. Sullivan, of Theisen, Lank, Mulford & Goldberg, Wilmington, DE, for defendantDover Steel Co., Inc.; Henry F. Siedzikowski, Brian P. Kenney, Timothy T. Myers, and Frederick P. Santarelli, of Elliott, Vanaskie & Riley, Blue Bell, PA., of counsel.

Gordon L. McLaughlin, Wilmington, DE, for defendantsGeorge Mantakounis and Mantas Painting Co.

Matthew J. Lynch, Jr., of Wilmington Trust Co., Wilmington, DE, for non-partyWilmington Trust Co.

OPINION

SUE L. ROBINSON, District Judge.

I.Introduction

This is a civil action brought by plaintiff, Standard Chlorine of Delaware, Inc.("Standard"), against various individuals and companies which, according to Standard's pleadings, engaged in a long-term scheme aimed at defrauding Standard of millions of dollars.The original Complaint named as party-defendants two individuals, Anthony R. Sinibaldi("AS") and Michael O. Sinibaldi("MS"), AS's brother, as well as eight companies¹, Dover Steel Company, Inc.("Dover")², Comma Corporation, Lorraine Rental & Equipment Company, Inc.("Lorraine Rental"), Delaware Rental Company("Delaware Rental"), SS & H Realty ("SS & H"), SHS Holding Corp.("SHS"), A.M.B. Construction Company, Inc.("AMB") and All-American Promotions, Inc.("All-American").³Standard subsequently filed an Amended Complaint which, inter alia, added an additional individual defendant, George Mantakounis("Mantakounis"), as well as another company defendant, Mantas Painting ("Mantas").⁴

Federal jurisdiction is premised on Standard's inclusion in its pleadings of a number of federal claims brought pursuant to the Racketeer Influenced and Corrupt Organizations Act,18 U.S.C. ?? 1961-1968("RICO").Standard also asserted a number of pendent state law claims in its pleadings, including claims of fraud and breach of fiduciary duty.These claims are grounded on Standard's lengthy averments of fact which detail an elaborate scheme through which Defendants and Mantas Defendants allegedly sought to defraud Standard of substantial funds.

Presently before the Court are a number of motions, including discovery-related motions and motions to dismiss Standard's pleadings for, inter alia, failure to state a claim upon which relief may be granted.The factual averments set forth in the Amended Complaint, which must be taken as true for purposes of the pending motions to dismiss Standard's pleadings, Marshall-Silver Construction Company, Inc. v. Mendel,835 F.2d 63, 64-66(3d Cir.1987), are briefly summarized below.

A.Brief Summary of Standard's Allegations of Fact

Standard is a Delaware corporation with its principal manufacturing facility (the "Plant") located in Delaware City, Delaware.Standard is a major producer of chlorinated benzenes, which it first began producing at its Plant in 1966.AS and MS both are former employees of Standard.Standard employed AS from 1966 until December 1990, when he was terminated.During his employment at Standard, AS held various positions at different times, including the position of Assistant Plant Manager, which he held from 1974 until 1977, when AS became Standard's Vice President for Manufacturing.MS worked for Standard from 1966 until May 1987, when he retired.MS also held several different positions at Standard during his employment, including the position of Maintenance Superintendent, which he held from 1977 until 1983, when MS became Plant Engineer and Manager of the Plant's Maintenance Department.

The allegations underlying Standard's claim that Defendants and Mantas Defendants defrauded plaintiff and engaged in a pattern of racketeering which injured plaintiff and, according to Standard, violated various provisions of RICO briefly are as follows:

AS and MS, while executives of Standard, acting in concert with the Company Defendants and others, set up a scheme to defraud Standard by secretly becoming the owners of several "outside" contractors, in order to profit from Standard's periodic needs for steel fabrication, maintenance and repair services.Hiding from Standard their interests in these contractors for a period of over 10 years, AS and MS willfully and repeatedly injured Standard and profited at Standard's expense, by awarding various kinds of work to these contractors, by overcharging Standard for the work done, by permitting these contractors to do work of poor quality, and by retaliating against Standard employees who were in a position to make defendants' wrongdoing known to Standard's senior management.In addition, AS and MS (as well as Mantakounis) further profited improperly at Standard's expense by directing large amounts of business to Mantas Painting in exchange for substantial payments to them, directly or indirectly, from Mantas Painting.Defendants succeeded in concealing their scheme until 1990, when an investigation into possible improprieties at the Plant revealed the history of misconduct described in Standard's pleadings.

(D.I. 72 at ?21)⁵

B.Pending motions

There are numerous motions pending before the Court which will be resolved herein.

Defendants initially filed a motion to dismiss(D.I. 18) the original Complaint (D.I. 1), which was fully briefed by the parties.(SeeD.I. Nos. 22, 35, 38, 54, 59, 60, 101, 102)Standard, however, filed an Amended Complaint which, in the Court's view, rendered moot Defendants' motion to dismiss the original Complaint.Accordingly, Defendants' motion to dismiss Standard's original Complaint will be denied as moot.⁶

Defendants then filed a motion to dismiss(D.I. 75) Standard's Amended Complaint (D.I. 72).Although it appears from the record that Defendants did not submit any briefs in support of their motion to dismiss the Amended Complaint, Defendants have incorporated by reference their various briefs filed in connection with their initial motion to dismiss into their motion to dismiss Standard's amended pleading.(SeeD.I. 75 at ??4-6)The court record indicates that Standard similarly has decided to rely on its briefs responsive to Defendants' motion to dismiss the original Complaint in opposing Defendants' motion to dismiss the Amended Complaint.

Mantas Defendants also moved to dismiss (D.I. 83, 85) the Amended Complaint as to them.This motion was fully briefed by Mantas Defendants and Standard.(SeeD.I. Nos. 84, 86, 88, 91, 92)In addition, Mantas Defendants filed an application (D.I. 93) for oral argument on its motion to dismiss.The Court will deny the application since the parties' briefs provided sufficient information for the Court to resolve this motion without oral argument.

A number of discovery-related motions are also presently pending before the Court.

AS moves the Court to compel Standard's production of certain insurance policies.The parties have indicated that Standard complied with AS's discovery request.Accordingly, this motion will be denied as moot.

Standard moves for entry of a confidentiality order.(D.I. 62).The parties completed briefing on this motion.(D.I. Nos. 62, 64, 66)

Standard and Defendants both filed motions to compel compliance with their respective document production requests.These motions were fully briefed by the parties as well.(D.I. Nos. 67, 68, 69, 71)

Mantas Defendants move for a protective order staying discovery as to them.(D.I. 94)Standard and Mantas Defendants filed briefs on this motion.(D.I. Nos. 95, 96, 97)Additionally, Mantas Defendants submitted an application for oral argument on this motion.(D.I. 98)The Court will deny Mantas Defendants' application since the parties' briefs sufficiently addressed the issues relevant to this motion such that the Court can resolve it without oral argument.

Wilmington Trust Company("Wilmington Trust" or "the bank") filed a non-partymotion for a protective order(D.I. 63) which seeks to quash or modify a subpoena duces tecum which Standard served on the bank.This motion was briefed by Standard as well as the bank and, like the other motions still pending in this case, is ripe for judicial action.(D.I. 63andD.I. 65)

II.Defendants' Motion to Dismiss the Amended Complaint

Defendants move to dismiss the Amended Complaint on a variety of grounds.

A. RICO"Enterprise"

In seeking dismissal of the Complaint for failure to state a RICO claim, defendants contend, inter alia, that plaintiffs failed "to inform Defendants, and this Court, who or what is the RICO`enterprise' with respect to each separate RICO Count."(D.I. 22at 13, n. 9)

Plaintiff clearly alleged in its Complaint⁷, however, that "the association in fact of all defendants constitutes an `enterprise' within the meaning of 18 U.S.C. ? 1961(4)."(D.I. 1 at ?166)⁸SeeSeville Indus. Machinery,742 F.2d at 790(plaintiff identified the four...