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Pelullo v. State

October 21, 1996


On appeal from the Superior Court of New Jersey, Law Division, Mercer County.

Approved for Publication October 21, 1996. As Corrected December 18, 1996.

Before Judges Shebell, P.g. Levy and Braithwaite. The opinion of the court was delivered by Shebell, P.j.a.d.

The opinion of the court was delivered by: Shebell

The opinion of the court was delivered by


Plaintiff, Arthur R. Pelullo, appeals from the January 5, 1996 entry of summary judgment in favor of defendants, New Jersey Commission of Investigation and its Chair, Leslie Z. Celentano. We affirm.

On June 29, 1995, the State Commission of Investigation (SCI) issued a report entitled "Organized Crime in Bars, Part II." The relevant information contained in the report was supplied by Philip Leonetti, nephew of Nicodemo Scarfo, who had previously become a witness for Federal and State authorities. The report, in pertinent part, stated (1) that plaintiff owned the Mars Restaurant which served as a meeting place for Scarfo Family members and family associates; (2) that plaintiff and the Mars Restaurant played roles in the Scarfo Family's dealings with the then Atlantic City Mayor; (3) that plaintiff had attended a meeting, during which he had to apologize to the Mayor for threatening to kill him because the Mayor would not help plaintiff get a license for his limousine company to operate in Atlantic City; (4) that the Pelullo brothers were guests at Scarfo's Christmas parties and at his Fort Lauderdale house; and (5) that plaintiff's brother, Leonard, owed money to Scarfo, and that when he didn't pay, plaintiff offered to turn over ownership of the Mars Restaurant to pay off the debt.

On July 31, 1995, plaintiff filed a Complaint against the SCI and its Chair alleging that they violated plaintiff's State and Federal Constitutional right to reputation by publishing the report without affording plaintiff due process of law. Plaintiff further alleged the report was inconsistent with the SCI's statutory authority in that it made and publicized findings with respect to the guilt of specific individuals including the plaintiff. Plaintiff sought a judgment declaring that the SCI violated his Constitutional rights or that the publication was inconsistent with its statutory authority. He asked for an injunction compelling defendants to expunge from their records and publications all references to the plaintiff suggesting that he is engaged in criminal activity, or that he is associated with organized crime or organized crime figures, and to notify those who have already received the report that plaintiff's name has been withdrawn. Plaintiff also asked for attorney's fees and costs pursuant to 42 U.S.C.A. sec. 1988.

Defendants did not file an answer, but moved to dismiss for failure to state a claim upon which relief could be granted and/or summary judgment. R. 4:6-2(e) and R. 4:46-1. Plaintiff cross-moved for summary judgment. After argument, the Law Division Judge denied plaintiff's cross-motion and granted summary judgment in favor of defendants.

The present controversy developed in this way. By letter dated May 2, 1995, plaintiff was advised by the SCI that it was going to issue a report in which he would be mentioned in a critical context. Plaintiff was informed that it was the policy of the Commission that any person to be mentioned in a potentially critical context in a Commission report be given an opportunity to respond by filing a statement under oath for the SCI's consideration. Plaintiff was told he would have to notify the SCI of his intent to respond within five days of receipt of the letter.

On May 5, 1995, plaintiff's then counsel gave notice on plaintiff's behalf and asked to be advised "of the context in which Mr. Pelullo may be mentioned in the report." Counsel for the SCI contacted the attorney's office by telephone on May 8, 1995, and "explained ... the nature of the report and read verbatim the portions of the report pertaining to Mr. Pellullo." She also indicated that if plaintiff wanted to file a statement, he would have to do so, in the form of an affidavit, by May 12, 1995.

On May 17, 1995, plaintiff's attorney advised the SCI's counsel that plaintiff would be submitting a "two liner" affidavit denying any social or business relationship with Leonetti or Scarfo, although plaintiff would not deny specific allegations because he could not "really recall" any specifics. On May 18, 1995, the SCI received plaintiff's affidavit which stated:

I, Arthur R. Pelullo, of Voorhees, New Jersey, being duly sworn according to law, hereby depose and say that I have never had any business or financial relationship of any kind with Philip Leonetti.

On June 8, 1995, the Commission's counsel contacted plaintiff's attorney and told him that the denial contained in plaintiff's affidavit may be included in the report and that, if it were included, the report would also refer to plaintiff's testimony before the SCI in 1985, regarding his business dealings with Leonetti. His attorney indicated he was not aware of plaintiff's prior testimony and would have to speak to him. On June 12, 1995, the SCI was advised that plaintiff's original affidavit would not be withdrawn.

On June 22, 1995, the SCI was informed by another attorney that he was replacing the plaintiff's former attorney. He requested a copy of Leonetti's statement, but the SCI's counsel advised him that he could not have access to internal documents. He then requested that he be able to revise plaintiff's affidavit, and was granted permission to submit a supplemental affidavit by June 23, 1995.

Plaintiff's attorney was further advised of the information that would be added to the report in light of plaintiff's earlier affidavit, as follows:

Arthur Pelullo, in an affidavit to the Commission, denied "any business or financial relationship of any kind with Philip Leonetti." On May 2, 1985, Arthur Pelullo testified before the Commission under a grant of immunity in connection with the Commission's investigation on boxing. He testified about two business dealings with Leonetti and also stated that he and his brother, Peter, attended Scarfo's 1984 Christmas party. The Commission's 1985 Report on Organized Crime in Boxing included a segment on Arthur Pelullo's involvement with organized crime. It is further noted that Leonetti testified at the 1992 federal prosecution of Robert F. Simone, Esq., and Anthony DiSalvo about the loanshark debt owed by Leonard Pelullo (another brother) and the involvement of Arthur and Peter in its repayment.... Both Peter and Arthur Pelullo attended Testa's wake in September 1984. Finally, the 1990 annual report of the Pennsylvania Crime Commission profiled the organized crime involvement of Peter and Arthur Pelullo.

By letter dated June 26, 1995, as requested, the Commission report on Organized Crime in Boxing and the relevant portion of the 1990 report by the Pennsylvania Crime Commission, were sent to plaintiff's counsel. He was advised that he could withdraw plaintiff's affidavit or provide a supplemental affidavit. If neither action were taken by June 23, 1995, then the additional information would appear in the report. On that date, the SCI received a "fax" from the attorney requesting the withdrawal of plaintiff's affidavit. The SCI, therefore, deleted from its report any reference to plaintiff's affidavit, his 1985 testimony before the SCI, the Commission's 1985 report on Organized Crime in Boxing, Leonetti's 1992 testimony, plaintiff's presence at Salvatore Testa's wake, and the 1990 annual report of the Pennsylvania Crime Commission.

On June 29, 1994, the SCI released the report, "Organized Crime in Bars, Part II," which, in reference to the plaintiff, contained the following regarding an apology for a threat:

On another occasion, Leonetti met with [former Atlantic City Mayor Michael] Matthews, [real estate developer and Scarfo Family associate Kenneth] Shapiro and a Scarfo Family associate named Arthur "Artie" Pelullo. Leonetti arranged for the meeting because he wanted Pelullo to apologize to Matthews for threatening him. During 1982 or 1983, when the Scarfo Family was involved with Matthews, Pelullo asked Matthews to help him get some type of license so that his limousine company could operate in Atlantic City. When Pelullo was having trouble getting the license, he threatened to kill Matthews, who contacted Leonetti for help. Leonetti set up a meeting at Shapiro's condominium to settle the matter and made Pelullo apologize to Matthews. Leonetti also met Matthews at the Mars Restaurant, a bar and restaurant owned by Pelullo on South Street in Philadelphia.

It also stated:

The Mars Restaurant, which was located at 712-714 South Street, was another location where Scarfo Family members and associates gathered for business and social purposes. It also served as a meeting place for Leonetti and then Atlantic City Mayor Michael J. Matthews. The Mars Restaurant was owned by Family associate Arthur Pelullo from April 1982 until 1986. The liquor license was held in the name of Caraway, Inc., which was owned by Carousel Group, Inc., in which Michael Vosbikian held 100% of the stock. Pelullo and Vosbikian were officers of Caraway and Vosbikian was the sole officer of Carousel. Following denial by Pennsylvania authorities of the application of Arthur Pelullo's brother, Leonard, to become sole ...

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