SAROKIN, District Judge.
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.
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 demands treble damages against all defendants and an order vacating the state court stipulation of settlement.
Defendants Jerry Turco and Jeryl Industries, by way of amended answer filed December 6, 1985, counterclaim against Hartz for malicious abuse of process.
On January 27, 1986, plaintiff Town of Kearny moved for summary judgment. On February 20, 1986, intervenor Hartz moved for summary judgment against all defendants on all counts and moved for dismissal of the counterclaim. On May 30, 1986, defendant Dolores Turco cross-moved for summary judgment on all counts, or in the alternative to dismiss the intervenor's complaint. Counsel for defendants Jerry Turco and Hudson Meadows Urban Development Corp joined in Dolores Turco's application.
In an order dated June 26, 1986, the court entered an order for voluntary dismissal with prejudice as to
all claims between and among the Town of Kearny and the settling defendants Hudson Meadows Urban Development Corp., formerly known as Mimi Urban Renewal Development Corp. and Mimi Redevelopment Associates, I; Dolores Turco and Jerry Turco.
The order stated that the dismissal of plaintiff Kearny's claims "shall not operate in any way to prejudice or limit the right of Hartz Mountain Industries to continue to litigate all of the claims set forth in its complaint."
On November 10, 1986, the court received a stipulation of settlement between the plaintiff Town of Kearney and defendants Grimes and Rowlands.
Hartz's federal claim, brought under 18 U.S.C. 1964(c),
alleges a violation of 18 U.S.C. § 1962(c).
Defendants contend that Hartz, as a matter of law, cannot prove the elements required to sustain a civil RICO action under Section 1964(c). Generally speaking, the elements of a violation of § 1962(c) are "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S. Ct. 3275, 3285, 87 L. Ed. 2d 346 (1985). Furthermore, a RICO plaintiff, in order to prevail on its § 1964(c) claim, must also show that that the conduct of the enterprise affects interstate commerce and that it "has been injured in its business or property by the conduct constituting the violation." Id.
There is no dispute in this case that the alleged conduct constitutes racketeering activity, or that the conduct affects interstate commerce. Thus, the court, in deciding this motion, must ascertain three things: first, whether any enterprise exists; second, whether this enterprise engaged in any pattern of racketeering activity; third, whether this pattern caused plaintiff any injury.
RICO defines "enterprise" 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." 18 U.S.C. § 1961(4). Three elements are essential to a finding of "enterprise." See United States v. Riccobene, 709 F.2d 214, 221-224 (3d Cir.), cert. denied, 464 U.S. 849, 78 L. Ed. 2d 145, 104 S. Ct. 157 (1983)(citing United States v. Turkette, 452 U.S. 576, 69 L. Ed. 2d 246, 101 S. Ct. 2524 (1981)). First, there must be an ongoing organization with some framework or superstructure for making and carrying out decisions. Second, the various associates must function as a continuing unit -- the membership can change, but each person must perform a role in the group consistent with the organizational structure discussed above. Third, the organization must be an entity separate and apart from the "pattern" of activity in which it engages.
Hartz alleges in their complaint that the enterprise in this case is that put forth in Par. 17 of plaintiff Kearny's amended complaint:
During that period between October 1, 1978 and December 30, 1979, the defendants Dolores Turco, Jerry Turco, Mimi Development Corp., Mimi Redevelopment Associates, the former mayor and two councilmen defendants Rowlands, Grimes, and Testa constituted an "enterprise" within the meaning of 18 U.S.C. 1961(4) in that said defendants constituted a group of individuals associated in fact.