Terminate Control Corp. v. Horowitz
| Citation | 28 F.3d 1335 |
| Decision Date | 05 July 1994 |
| Docket Number | D,Nos. 92,95 and 471,s. 92 |
| Parties | 93 Ed. Law Rep. 29, RICO Bus.Disp.Guide 8601 TERMINATE CONTROL CORP., Plaintiff, Nu-Life Construction Corporation, Plaintiff-Appellee-Cross-Appellant, v. Stuart HOROWITZ; John J. Manfredi; John Frisone; John Does 1 through 20, Defendants, Division of School Buildings of The Board of Education of The City of New York; Nicholas E. Borg; Board of Education, Defendants-Cross-Appellees, Stanley W. Dobrowolski and John Trapanotto, Defendants-Appellants-Cross-Appellees. ockets 93-7009, 93-7049 and 93-7050. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Stanley Dobrowolski, pro se.
John Trapanotto, pro se.
Gary S. Graifman, New York City (Kantrowitz & Goldhamer, P.C., Chestnut Ridge, NY), for plaintiff-appellee-cross-appellant.
Elizabeth I. Freedman, Asst. Corp. Counsel of the City of New York, New York City (O. Peter Sherwood, Corp. Counsel of the City of New York, Francis F. Caputo, John P. Woods, Susan Finkenberg, Asst. Corp. Counsels of the City of New York, New York City, of counsel), for defendants-cross-appellees.
Before: OAKES, PRATT and MAHONEY, Circuit Judges.
Stanley W. Dobrowolski and John Trapanotto appeal pro se from an amended judgment entered December 14, 1992 in the United States District Court for the Eastern District of New York, Arthur D. Spatt, Judge, upon a jury verdict finding them civilly liable to Nu-Life Construction Corporation ("Nu-Life") for a violation of 18 U.S.C. Sec. 1962(d), a provision of the Racketeer Influenced and Corrupt Organizations statute, 18 U.S.C. Secs. 1961-68 ("RICO"), by conspiring to extort Nu-Life. Dobrowolski argues that the district court erred in not appointing counsel to represent him at trial. Dobrowolski and Trapanotto both contend that: (1) attorney fees should not have been awarded against them based upon work relating to issues as to which Nu-Life did not prevail and/or which involved litigants other than Dobrowolski and Trapanotto; (2) damages based upon lost profits on nonawarded municipal contracts should not have been granted to Nu-Life; and (3) the jury instructions in this case erroneously permitted standing for Nu-Life on its claim of civil RICO conspiracy to be premised upon injuries caused by nonpredicate acts.
Nu-Life cross-appeals from the same judgment. Nu-Life argues that the district court improperly limited the pool of predicate acts that the jury could consider in determining whether certain of the individual defendants engaged in a pattern of racketeering activity against Nu-Life in violation of 18 U.S.C. Sec. 1962(c) and (d). In addition, Nu-Life cross-appeals from the judgment insofar as it granted summary judgment dismissing Nu-Life's fourth amended complaint. That complaint sought to hold the Board of Education of the City of New York (the "Board") and (arguably) the individual defendants named therein liable under 42 U.S.C. Sec. 1983 for retaliating against Nu-Life as a result of Nu-Life's refusal to comply with, and reports to public authorities concerning, a systematic practice of requiring contractors to participate in a kickback scheme conducted by the Board's Division of School Buildings (the "DSB") in the awarding of DSB maintenance and repair contracts. Nu-Life claimed violations of its constitutional rights of due process, equal protection, freedom of expression, and to petition the government for a redress of grievances.
We affirm the judgment against Dobrowolski and Trapanotto and the summary judgment dismissing Nu-Life's fourth amended complaint against the Board of Education, but affirm in part and vacate and remand in part with respect to the dismissal of the fourth amended complaint against the individual defendants named therein.
On March 18, 1986, Nu-Life and Terminate Control Corp. 1 commenced this action against the Board, the DSB, and several named and unnamed employees of the DSB. Nu-Life alleged a widespread scheme of solicitation of kickbacks in connection with the awarding of DSB building repair, maintenance, and construction contracts. Nu-Life further alleged that "a set percentage existed for such kickback[s] in the sum of two-percent (2%) of the contract price for all contract work approved for payment; ten percent (10%) of all cost overruns which were necessary or reasonably required to complete the work and twenty-five percent (25%) of all unnecessary extras which the inspector agreed to give to the contractor."
In multiple counts, Nu-Life averred violations of the Hobbs Act, 18 U.S.C. Sec. 1951, by enterprises consisting of various combinations of the individual defendants, the Board, and the DSB, all of which enterprises engaged in and/or conspired to engage in a pattern of racketeering activity in violation of Sec. 1962(c) and (d). According to Nu-Life, the conduct directed toward it was "part of customary practice and procedure which was knowingly and willfully engaged in and authorized by [the Board] and constituted a direct benefit to the [Board] and the [DSB]." Nu-Life sought treble damages and attorney fees pursuant to 18 U.S.C. Sec. 1964(c).
During 1984 and 1985, the DSB awarded Nu-Life contracts for painting and repair work at three Brooklyn schools: public schools 100, 126, and 132. According to trial testimony by Anthony Damigos, a Nu-Life foreman (and the father of Paul Damigos, Nu-Life's President), when Nu-Life refused to pay kickbacks in connection with its contract performance, Trapanotto, a DSB field inspector, called Nu-Life's decision a "big mistake," and predicted that Nu-Life was "going to have a lot of problems ... because everybody is expecting [the kickback]."
Nu-Life provided considerable trial testimony concerning the ensuing problems. For example, Anthony Damigos related that as a consequence of Nu-Life's refusal to accede to the kickback demands, Trapanotto withheld the fifth and final payment due on its P.S. 100 contract. Anthony Damigos testified that he then sought a meeting to discuss this situation with Trapanotto and his superiors, David Krugman, a DSB manager, and Dobrowolski, a DSB general inspector who subsequently pled guilty to a charge of bribe-taking in connection with his DSB activities. At that meeting, according to Anthony Damigos, Dobrowolski attempted to enforce Trapanotto's demands, warning: "I can sit on your payments for two weeks and then disapprove it [sic]." Spencer Campbell, a Nu-Life employee, testified that at the direction of Dobrowolski, Nu-Life's work on P.S. 132 was sabotaged by the cutting of safety ropes to a scaffolding from which Nu-Life employees worked.
Paul Damigos testified that he and his father met with Nicholas E. Borg, executive director of the DSB, to complain about the kickback demands and related retaliation, and that Borg assured them that these problems would be addressed and the retaliation would cease. Nu-Life claims that instead, the DSB promptly instituted default proceedings against Nu-Life. (Default proceedings are administrative proceedings at which a contractor appears before an in-house board of review to respond to charges that it is in default on DSB contracts.) Further, a Board employee testified that Borg subsequently directed him to "take no action on all bid tabulation sheets wherein Nu-Life was the low bidder."
In addition, several witnesses testified that Dobrowolski and Trapanotto were among the key participants in a systematized scheme of extortion "shake downs" carried out by many employees of the DSB. Jerome Golding, a former DSB inspector, testified that a group of DSB inspectors formalized the scheme during a meeting in 1976 or 1977. See People v. Manfredi, 166 A.D.2d 460, 463, 560 N.Y.S.2d 679, 682 (2d Dep't), (referring to "seminal" luncheon meeting that was formative of kickback conspiracy), appeal denied, 76 N.Y.2d 1022, 566 N.E.2d 1178, 565 N.Y.S.2d 773 (1990). Thereafter, participants met every four to six weeks to coordinate the effort and carry it forward. Golding also testified that the kickbacks were divided among DSB inspectors and area managers according to a prearranged scheme.
On December 2, 1991, on motion by the DSB and the Board, Judge Spatt dismissed the RICO counts against them on the ground that "a municipal entity ... is incapable of forming the criminal intent necessary to establish the underlying predicate offenses under the Hobbs Act, and therefore may not be held civilly liable under RICO, 18 U.S.C. Sec. 1964(c)." Nu-Life Constr. Corp. v. Board of Educ., 779 F.Supp. 248, 252 (E.D.N.Y.1991). This ruling has not been challenged by Nu-Life on appeal.
The RICO claims ultimately went to the jury against Dobrowolski and Trapanotto, who were charged with both substantive (Sec. 1962(c)) and conspiracy (Sec. 1962(d)) RICO violations, and Borg, who was charged only with a RICO conspiracy violation. On March 13, 1992, the jury found that Nu-Life had failed to prove that Trapanotto and Dobrowolski had violated Sec. 1962(c), but had proved that Dobrowolski and Trapanotto had conspired to engage in a pattern of racketeering activity in violation of Sec. 1962(d). The jury found that Borg had not violated Sec. 1962(d). The jury awarded a total of $23,400 in damages to Nu-Life against Dobrowolski and Trapanotto, apportioned as follows:
1) $4,500 for improperly withheld payments for work completed under the contract concerning P.S. 132;
2) $7,500 for lost profits due to work Nu-Life was improperly prevented from completing under the contract concerning P.S. 132;
3) $5,000 for improperly withheld payments for work completed under the contract concerning P.S. 126; and
4) $6,400 for lost profits on any or all of thirty-six contracts as to which Nu-Life was the low bidder but was not awarded the contracts.
This award was trebled pursuant to Sec. 1964(c). Nu-Life also applied for attorney fees pursuant to Sec. 1964(c), and Judge...
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