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TOWN OF KEARNY v. HUDSON MEADOWS URBAN RENEWAL COR

December 2, 1986

THE TOWN OF KEARNY, a municipal corporation of New Jersey, Plaintiff,
v.
HUDSON MEADOWS URBAN RENEWAL CORP., formerly known as MIMI URBAN RENEWAL DEVELOPMENT CORP., formerly Mimi Development Corp., a corporation of New Jersey; MIMI REDEVELOPMENT ASSOCIATES I, a partnership of New Jersey; DOLORES TURCO and JERRY TURCO, individually; JERYL INDUSTRIES, INC., a corporation of New Jersey; DAVID C. ROWLANDS; EDMUND GRIMES; and JAMES TESTA, Defendants, HARTZ MOUNTAIN INDUSTRIES, INC., a New York corporation, Intervenor



The opinion of the court was delivered by: SAROKIN

 In this civil RICO case, intervenor Hartz Mountain Corp. moves for summary judgment. Defendants cross-move for summary judgment or alternatively, to dismiss the complaint. The court denies intervenor's motion for summary judgment. The court grants defendants, motion for summary judgment.

 BACKGROUND

 The following statement draws from intervenor Hartz Mountain's statement of facts based on the testimony in United States v. Testa, Crim No. 82-350 (D.N.J. 1983). Contested facts will be noted.

 On December 15, 1978, the Town of Kearny and Hartz Mountain entered into a Master Leasing and Option Agreement pursuant to New Jersey statutory law. Under the lease, Hartz was to develop a tract of land in the Kearny Meadowlands.

 Paragraph 19 of the agreement grants Hartz "a right of first refusal with regard to the sale, letting or hiring, of any portion of the balance of the 1,100 acre tract owned in part by the Town and in part by certain private owners of which the Redevelopment Area is a part." The paragraph states that Hartz shall have the opportunity to match "any bona fide offer" by a prospective developer on any part of the 1,100 acre first refusal tract. The paragraph refers to an annexed "survey map" that describes the tract.

 Hartz filed the agreement and the accompanying maps with the Hudson County Register of Deeds. Hartz filed a survey map showing a right of refusal for 2,000 acres. According to defendants, this map had been marked as "N.G." by the town engineer. Defendants contend that the final map should have indicated a first refusal area of approximately 1100 acres.

 Soon after the Hartz-Kearny agreement, the following individuals, all defendants, met at a restaurant in Harrison: Jerry Turco, "principal representative" of Mimi Development Corp. (Mimi) and sole owner and officer of Jeryl Industries; Dolores Turco, wife of Jerry Turco, then President and 20% shareholder of Mimi; David Rowlands, then Mayor of Kearny; Edmund Grimes, then Councilman in Kearny; James Testa, then Councilman in Kearny. At that meeting, Jerry Turco agreed to pay the three officials $75,000 in exchange for the right to have Mimi develop part of the Kearny Meadowlands property. The bribe was to be paid in three installments of $25,000: the first installment would be due when Kearny took official action concerning Mimi's rights; the second installment would be due when the lease was actually signed; the third installment would be due after the lease had been in effect.

 On March 14, 1979, Kearny voted to adopt a Blight Resolution for the tract to be leased to Mimi; this resolution cleared the way for bids from developers. On July 31, 1979, the Town Council approved Mimi's proposal. (Apparently, Jerry Turco then paid the first $25,000 installment.) On August 8, 1979, Kearny entered into a Master Leasing and Option Agreement with Mimi. The land to be leased was part of Hartz's 2,000 acre first refusal tract, as that tract was defined in the survey map filed in Hudson County. Defendants contend that the land was not part of the 1100 acre tract upon which Kearny and Hartz actually agreed.

 On August 9, 1979, Jerry Turco paid the second $25,000 installment to Grimes and Rowlands.

 Hartz became aware of the Mimi lease in September 1979 and notified the Town in writing that Hartz considered the Mimi lease to be a breach of Hartz's first refusal right.

 In early December 1979, the Turcos met with Rowland in North Arlington. Rowlands asked for the third installment. Jerry Turco replied that the money would be forthcoming when the council indicated that it would support Mimi in the conflict with Hartz. On December 10, 1979, the Town Council discussed the alleged conflict in the leases. On December 12, the Council passed a motion to notify Hartz by letter that the Council saw no conflict between the Hartz and Mimi leases.

 Immediately after this meeting, the Turcos met with Rowland and Grimes. At the meeting, the Turcos, attorney prepared the Council's letter to Hartz and Rowlands approved the draft. During the meeting, Dolores Turco delivered the final installment to Rowlands. This installment was $16,600 -- Testa's share was not included, as the Turcos were dissatisfied with his efforts.

 On June 2, 1980, Hartz filed a suit in the Superior Court of New Jersey against Mimi and the Town of Kearny. The suit sought invalidation of Mimi's lease. During discovery, Grimes, Rowland, Jerry Turco, and Dolores Turco each submitted affidavits supporting the legitimacy of the Mimi lease. Grimes and Rowland further swore to the position that Hartz had no prior rights to the property leased to Mimi.

 On February 3, 1981, based on this and other discovery, Hartz entered into a stipulation of settlement with Mimi and the Town.

 In early 1982, Rowlands and Grimes were convicted of federal offenses relating to their service as public officials. In November 1982, a federal grand jury indicted James Testa for six counts of "extortion" under 18 U.S.C. § 1951. After trial in which Rowland, Grimes, Jerry Turco, and Dolores Turco testified, Testa was convicted in May 1983. On February 3, 1983, Jerry Turco pled guilty to a one count information alleging that Turco conspired to devise a scheme defraud the citizens of Kearny, in violation of 18 U.S.C. § 1341. The information recounted two incidents of bribery: a payment by Turco in exchange for action by the Town to alleviate a flooding problem concerning Jeryl Industries (an entity wholly owned by Turco) and the Mimi lease transaction.

 On October 5, 1984, the Town of Kearny filed a complaint in federal district court seeking damages under RICO and rescission of the Mimi lease. Pursuant to an order of September 23, 1985, Hartz intervened as of right in this action. Hartz's complaint of October 8, 1985 contains three counts alleging violations of RICO (specifically 18 U.S.C. 1962(c),(d)) and one count alleging fraud and misrepresentation under New Jersey law. Hartz ...


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