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FARRIS v. COUNTY OF CAMDEN

August 20, 1999

RAHN J. FARRIS, PLAINTIFF,
v.
COUNTY OF CAMDEN, CAMDEN COUNTY DEMOCRATIC COMMITTEE, GEORGE E. NORCROSS, III, LOUIS BEZICH, JOSEPH BENTON, THOMAS MITCHELL, JOHN ADLER, JACK GALLAGHER, GALLAGHER ASSOCIATES, INC., JUDY PALOMBI AND PHYLLIS PEARL, DEFENDANTS.



The opinion of the court was delivered by: Orlofsky, District Judge.

    OPINION

TABLE OF CONTENTS

  I.   INTRODUCTION ..................................................................    311
  II.  BACKGROUND ....................................................................    313
  III. LEGAL STANDARD GOVERNING MOTIONS FOR SUMMARY JUDGMENT .........................    320
  IV.  DISCUSSION ....................................................................    321
       A. Defendants' Motions for Summary Judgment ...................................    321
          1. Norcross's and the CCDC's Motion for Summary Judgment and Application
               of the Coconspirator Exception to the Hearsay Rule set forth in
               Rule 801(d)(2)(E) of the Federal Rules of Evidence ....................    321
             a. Counts IX and X, Tortious Interference ...............................    321
             b. Counts XII and XIV, Conspiracy to Tortiously Interfere ...............    328
             c. Count XIII, Conspiracy to Defraud ....................................    330
             d. Counts XV, XVI, XVII, XVIII, and XIX Conspiracy to Extort,
                  Blackmail and Deprive Farris of his Real Property...................    331
             e. The Motion for Sanctions Pursuant to 28 U.S.C. § 1927 and the
                  Court's Inherent Power .............................................    331
          2. Camden County's Motion for Summary Judgment .............................    335
             a. Count I, Rescission or Reformation on the basis of Economic
                  Duress .............................................................    335
             b. Count II, Rescission or Reformation on the Basis of Fraud and
                  Misrepresentation ..................................................    339
             c. Count III, Rescission or Reformation on the Basis of Unconscionability
                  ....................................................................    341
             d. Count IV, Breach of the Original 1300 Building lease .................    343
             e. Count V, Breach of the Original 1350 Building Lease ..................    344
             f. Count VI, Common Law Fraud ...........................................    345
             g. Count VII, Breach of Contract/Conversion .............................    346
             h. Count XI, Breach of Duty of Good Faith and Fair Dealing ..............    347
             i. Count XIII, Conspiracy to Defraud ....................................    349
             j. Counts XVII and XIX, Conspiracy to Extort, Blackmail and Deprive
                  Farris of his Real Property ........................................    349
          3. Mitchell's Motion for Summary Judgment ..................................    350
             a. Count VI, Common Law Fraud ...........................................    350
             b. Count VIII, Tortious Interference with Contract and Prospective
                  Economic Advantage .................................................    351
             c. Count XII, Conspiracy to Tortiously Interfere and Defraud ............    354
             d. Counts XV and XVIII, Conspiracy to Extort, Blackmail and Deprive
                  Farris of his Real Property ........................................    354
V.   CONCLUSION ....................................................................    355

I. INTRODUCTION

This diversity case presents novel issues of law arising out of the application of the Federal Rules of Evidence to state law causes of action at the summary judgment stage of the litigation. Specifically, in determining whether Plaintiff, Rahn J. Farris, has produced enough evidence to avoid the entry of summary judgment for Defendants, George E. Norcross, III, and the Camden County Democratic Committee, I must rule on the admissibility of hearsay statements under the coconspirator exception to the hearsay rule set forth in Rule 801(d)(2)(E) of the Federal Rules of Evidence. The application of the coconspirator exception in this case is further complicated by the denial by the alleged declarants, Defendants, Thomas A. Mitchell, Judith Palombi, and Phyllis Pearl, that they made the statements Plaintiff seeks to introduce against Norcross and the Camden County Democratic Committee. Because this Court's determination of the admissibility of these alleged coconspirators' statements turns on the credibility of the declarants and the witnesses offering their alleged statements, I hold that, prior to resolving the motion for summary judgment, I must conduct a hearing pursuant to Rule 104(a) of the Federal Rules of Evidence,*fn1 to take testimony and to assess the credibility of the witnesses.

This case also presents a novel issue of New Jersey state law involving whether a chairman of a county political committee can, as a matter of law, conspire with the county political committee, a legal entity which is a creature of New Jersey statute. For the reasons that follow, I hold that just as an authorized agent of a private corporation cannot conspire with the corporation that employs him, so too, a chairman of a county political committee cannot conspire with the county political committee itself.

On October 6, 1997, Plaintiff, Rahn J. Farris, filed a thirty-five count civil complaint in this Court alleging federal and pendent state law claims against Defendants, County of Camden, Camden County Democratic Committee, George E. Norcross, III, Louis Bezich, Joseph Benton, Thomas Mitchell, John Adler, Jack Gallagher, Gallagher Associates, Inc., Judy Palombi and Phyllis Pearl. On December 8, 1998, Defendants, Norcross and the Camden County Democratic Committee, moved for the imposition of sanctions and attorneys' fees against counsel for Plaintiff, pursuant to 28 U.S.C. § 1927 and the Court's inherent powers. Curiously, no such relief was sought pursuant to Rule 11 of the Federal Rules of Civil Procedure. Shortly thereafter, on February 5, 1999, Norcross and the Camden County Democratic Committee moved for summary judgment on all claims. Similarly on April 30, 1999, and May 10, 1999, respectively, Defendants, the County of Camden and Thomas A. Mitchell, moved for summary judgment on all claims asserted against them. Because Plaintiff voluntarily dismissed his federal causes of action on December 14, 1998, this Court's jurisdiction is based upon 28 U.S.C. § 1332 and 1367.*fn2

For the reasons set forth below, I shall deny the motion of Defendants, Norcross and the Camden County Democratic Committee, for sanctions and attorneys' fees because they have failed to make the requisite showing that counsel for Plaintiff acted in bad faith in filing the Complaint and in conducting discovery. I shall, however, grant the motion of Norcross and the Camden County Democratic Committee for summary judgment on Plaintiff's claims for civil conspiracy to defraud, extort political contributions, blackmail, and to tortiously interfere with Plaintiff's real property. Insofar as Norcross and the Democratic Committee seek summary judgment on Plaintiff's claims for tortious interference with Plaintiff's contract and prospective economic advantage, and for civil conspiracy to so tortiously interfere and to defraud, I shall deny the motion for summary judgment without prejudice to the right of Norcross and the Committee to renew this motion at the conclusion of a pre-trial hearing conducted pursuant to Rule 104(a) to determine the admissibility of the alleged coconspirator statements under Rule 801(d)(2)(E) of the Federal Rules of Evidence.

In addition, I shall deny the motion for summary judgment of the County of Camden on Plaintiff's claims for: (1) rescission or reformation of the renegotiated leases between Plaintiff and the County of Camden on the basis of economic duress, equitable fraud, and unconscionability; (2) breach of the original lease covering Plaintiff's building located at 1300 Admiral Wilson Boulevard; and (3) breach of the covenant of good faith and fair dealing. I shall grant the County of Camden's motion for summary judgment on Plaintiff's claims for breach of the original lease covering Plaintiff's property located at 1350 Admiral Wilson Boulevard, common law fraud, and civil conspiracy.

Finally, I shall deny the motion for summary judgment of Defendant, Thomas A. Mitchell, on Plaintiff's claims for common law fraud and civil conspiracy to defraud. I shall, however, grant Mitchell's motion for summary judgment on Plaintiff's claims for tortious interference with Plaintiff's contract and prospective economic advantage, and civil conspiracy.

II. BACKGROUND

Plaintiff, Rahn J. Farris ("Farris"), a citizen of the Commonwealth of Pennsylvania, was the owner of two commercial buildings located at 1300 and 1350 Admiral Wilson Boulevard, Camden, New Jersey (hereinafter the "1300 Building," and the "1350 Building," respectively). See Local Rule 56.1 Statement of Material Facts of George E. Norcross, III, and the Camden County Democratic Committee (filed Feb. 5, 1999), ¶ 3 (hereinafter, "CCDC's R. 56.1"); see also Complaint, ¶ 18; Deposition of Rahn J. Farris (dated Aug. 4, 1998) at 15, 90. In August, 1989, the County of Camden (the "County" or "Camden County") leased 20,000 square feet of the 1300 Building from Farris for the purpose of operating and housing the County's Reach Program, which was operated by an employee of the County, William Maguire ("Maguire"). See Farris Dep. (Aug. 4, 1998) at 219-20, 222-23. The lease term on the 1300 Building was from October 1, 1989, to July 31, 1992, with monthly rental payments of $25,000, resulting in an annual rental payment of $300,000. See Plaintiff's Exhibits in Opposition of Motion for Sanctions (filed Jan. 20, 1998) ("Pl. Sanction Opp."), Exh. 8 (1300 Building Lease).

In March, 1990, the County leased an additional 7500 square feet in the 1300 Building from Farris for the purpose of operating the County's Division for Children. See Pl. Sanctions Opp., Exh. 9 (Additional 1300 Building Leases); see also Farris Dep. (Aug. 4, 1998) at 223. These additional leases provided for monthly rental payments at a rate of $12 per square foot. See Sanctions Opp., Exh. 9. Defendant, Judith Palombi ("Palombi"), was the director of the County's Division for Children, and her office was located in the 1300 Building. See Palombi's Local Rule 56.1 Statement of Material Fact (filed Apr. 30, 1999), ¶ 4.

In December, 1989, the County leased 20,000 square feet in the 1350 Building in order to house the County's Business Incubator Program. See Certification of Anthony Valenti, Esq. (filed Apr. 30, 1999), Exh. 12 (Internal County Memorandum from Thomas A. Mitchell to Stephen R. Sasala (dated June 6, 1991)). The 1350 Building lease called for a rental payment of $12.00 per square foot, which corresponded to a $20,000 per month rental payment, or an annual rental payment of $240,000. See id. The term of the 1350 Building lease ran from December 1, 1989, to November 30, 1992. See id. The County and Farris dispute whether or not the County officially took possession of the 1350 Building because, although the director of the Business Incubator program, Ben Smallwood, had entered the premises, the County had terminated the funding for the program before it officially began to operate. See id.; see also Farris Dep. (Aug. 4, 1998) at 227-30.

In October, 1991, Farris and the County entered into a new lease on the 1350 Building which superceded the original lease executed in December, 1989. See Valenti Cert., (1999), Exh. 13 (1350 Building Lease (dated Oct. 10, 1991)). In December, 1991, Defendant, Thomas Mitchell ("Mitchell"), Assistant County Counsel, assured Farris that, notwithstanding the termination of Ben Smallwood's program, the County intended to reenter the premises in January, 1991. See Farris Dep. (Aug. 4, 1998) at 230; See Deposition of Thomas A. Mitchell (dated Dec. 10, 1998) at 204.

Farris hired Mark Willis ("Willis") as building manager for both the 1300 and the 1350 Buildings. See Deposition of Mark Willis (dated Sept. 17, 1998) at 58. Farris gave Willis "full responsibility for the day to day operations of the buildings[,] and [Willis] was responsible for such items as collecting rent, paying expenses, maintenance and receiving the mail." See Plaintiff's Local Rule 56.1 Statement of Material Facts (filed Feb. 5, 1999) at 9; Willis Dep. (Sept. 17, 1998) at 11-12.

In the fall of 1991, "Farris was mailed 10 tickets to a political fundraiser [sic]" which requested that he make a $10,000 political contribution. See Farris Dep. (Aug. 4, 1998) at 196-99; see also Pl. R. 56.1 at 9. The parties dispute whether the political fund-raiser was for the benefit of Congressman Robert Andrews' re-election campaign. Farris disregarded the solicitation. About a month later, Farris received a similar solicitation in the mail. See Pl. R. 56.1 at 9. Farris testified at his August 12, 1998, deposition that Maguire told him the tickets were sent by Defendant, George E. Norcross, III ("Norcross"), the Chairman of Defendant, Camden County Democratic Committee (the "CCDC"). See Farris Dep. (Aug. 4, 1998) at 195.

Farris testified that, in September or October, 1991, Maguire "advised [him] that Norcross wanted to meet him and [Maguire] set up a meeting with Norcross for the next day[.]" See Farris Dep. at 190; see also CCDC R. 56.1, ¶ 5. Farris testified that, "[a]t the meeting, Norcross discussed the tickets and questioned how he could get Farris to be a team player." See Pl. R. 56.1 at 10. Specifically, Farris testified:

  I walked in his office . . . And he said to me,
  something to the point of "How do I get you to be a
  team player?"
  I said, "If you're talking about the tickets, I'd
  love to be a team player, but I can't afford the
  tickets at this point in time." He told me how
  important it was that tickets be sold to get their
  candidate wherever that candidate is going . . . And
  I told him, "I put too much money in my building and
  I really couldn't afford it." He said, "How much do
  you owe on your building?" Somehow a number,
  seven-fifty, seven hundred thousand came up . . . And
  his remark to me was, "I'll buy your building for
  seven hundred thousand." I said, "I can't sell you
  the building. I have more [in] liens [than] . . .
  that. I couldn't sell it, and I'm not here to sell
  the building." At that point in time, he just put his
  hands on his desk. He said, "This meeting's over."

See Farris Dep. (Aug. 4, 1998) at 191-92.

When Farris returned to his office at the 1300 Building after his meeting with Norcross, "Maguire was already there waiting." See Pl. R. 56.1 at 10; see also Farris Dep. (Aug. 4, 1998) at 193. Willis arrived at Farris's office also. See Willis Dep. (Sept. 24, 1998) at 146. Farris and Willis testified that Maguire was aware of the outcome of Farris's meeting with Norcross, even without having been told by Farris. See Farris Dep. (Aug. 4, 1998) at 193; Willis Dep. (Sept. 24, 1998) at 146. Willis further testified that Maguire stated that Farris "was going to start having trouble with [Norcross.]" See Willis Dep. (Sept. 24, 1998) at 153.

Willis also testified that Palombi "was aware of [Farris's] meeting with Norcross and what had transpired." See Pl. R. 56.1 at 11; see also Willis Dep. (Sept. 24, 1998) at 115. According to Willis, Palombi also stated that she had a letter from Norcross stating that if Farris did not make the requested political contributions the County was going to move out of the 1300 Building. See Willis Dep. (Sept. 24, 1998) at 116-22.

Palombi testified that she did have conversations with Willis and Farris regarding political fund-raisers. See Deposition of Judith Palombi (dated Dec. 28, 1998) at 86-87. Palombi, however, denied receiving a letter from Norcross about Farris's failure to make political contributions. See id. at 117. Palombi testified:

  I know there was no letter, absolutely no letter. I
  have no idea what Mark Willis is talking about when
  he mentions a letter regarding Mr. Norcross. I have
  never had . . . a letter from George Norcross
  involving any fund-raising requesting that I have
  anything to do with Rahn Farris or Mark Willis,
  never.

Id.

Willis testified that shortly after Farris's meeting with Norcross the County began to withhold rent due under the 1300 and the 1350 Building leases. See Willis Dep. (Sept. 24, 1998) at 39-40. Willis further testified that Maguire stated that "Norcross had directed the rents be held up. . . ." See Pl. R. 56.1 at 11; Willis Dep. (Sept. 24, 1998) at 155.

Stephen R. Sasala ("Sasala"), the County Administrator for Camden County from April 1, 1991, to March 31, 1994, testified that, in 1991, the Board of Chosen Freeholders decided to renegotiate a number of the County's leases. See Deposition of Stephen R. Sasala (dated Nov. 13, 1998) at 20, 22. Sasala, who had been appointed County Administrator by the Board when it was controlled by the Republican Party, testified:

  [The decision to renegotiate Farris's leases was
  made] in 1991 when the Republicans controlled the
  freeholder board, but it certainly carried over into
  1992 [after the Democrats gained control of the
  Board].

Id. at 22. Sasala further testified:

  Q. [By Mr. Zarrillo] And the reason that you
  understood why the Republican administration wanted
  to renegotiate the leases was?

A. To consolidate county office space.

  Q. Was there anything about the amounts of money
  being paid on those leases that was a motivating
  factor, as far you know?
  A. I believe there was also at the time an
  understanding that the leases were excessive, and
  that they wanted to cut the amount on a per square
  foot basis.
  Q. In 1992 there was a transition to a Democratic
  freeholder board. Correct?

A. Correct

  Q. Were you aware of the rationale as to why the
  freeholder board wanted to continue the process of
  renegotiating leases that was begun in the Republican
  administration . . . ?
  A. Basically because they were inflated leases, they
  were very expensive . . .

Id. at 22-23.

Sasala testified that Mitchell and Defendant, Joseph Benton ("Benton"), were directed to conduct the actual renegotiations with Farris. See id. at 25. In March, 1992, Benton "contacted Farris and advised him that he had to renegotiate all of his leases with the County[.]" See Pl. R. 56.1 at 12; see also Farris Dep. (Aug. 12, 1998) at 331-32; Deposition of Joseph Benton (Dec. 9, 1998) at 70-73, 106. Farris testified that Benton stated that "[i]t was in [his] best interest . . . to renegotiate with the County, or they're [sic] going to move, and [Farris was] going to be out a lot of money." See Farris Dep. (Aug. 12, 1998) at 332. Farris further testified that Benton offered him "five dollars a square foot." Id. at 331. Benton, however, testified that he offered Farris four to five dollars less per square foot than the existing rental rate. See Benton Dep. at 70-73, 106.

After speaking with Benton, Farris contacted Mitchell. See Farris Dep. (Aug. 12, 1998) at 332. Farris testified:

  Tom Mitchell got back to me in a couple of days. He
  said, "They want to renegotiate with you." I said,
  "Why?" He said, "Because that's what George
  [Norcross] wants to do."

Id. Mitchell testified, however, that he did not tell Farris that Norcross directed that Farris's leases be renegotiated. See Mitchell Dep. at 103-04.

Regarding the renegotiations, Sasala testified that Farris complained to him that he thought that his leases with the County were being renegotiated because he had failed to make political contributions. See Sasala Dep. at 26-28. Sasala further testified:

  [Farris] called me and pleaded with me and said he
  could not get [the rent] paid and was there anything
  I could do about it.
  I recall having a conversation with [Defendant, Louis
  Bezich ("Bezich")]. And his response was "I'll take
  care of it."
  Q. [By Mr. Zarrillo] . . . During the course of this
  conversation with Mr. Bezich, do you recall him
  saying to you that the checks were on his desk for
  Mr. Farris?
  A. That sounds familiar. I think so . . . I believe
  the checks were cut[.]

Id. at 29-31.

Through the renegotiations with Farris, the County was seeking the inclusion of two specific terms in the renegotiated lease for the 1300 Building. First, the County was seeking a downward-spiraling, reduced rental rate. See Sasala Dep. at 24. Sasala testified that the rental provision, which reduced the rent per square foot by $.25 each year for the first three years of the lease, was his idea. See id. at 95-96. Second, the County was seeking a clause in the renegotiated leases that permitted the County to terminate the lease on thirty-days notice to Farris. See Mitchell Dep. at 222. Sasala testified that the thirty-day termination provision "was tied into the county having maximum flexibility, because there was some discussion [about consolidating office space] in the RCA building[,]" located in Camden, New Jersey. See Sasala Dep. at 98-99.

During the renegotiations of Farris's leases with the County, Farris testified that the County was withholding rent due under the original 1350 Building lease. See Farris Dep. (Aug. 4, 1998) at 231; Willis Dep. (Sept. 22, 1998) at 146-47. Farris further testified that Mitchell and Benton represented to him that, if he did not agree to the County's terms in the renegotiated leases, the County would vacate the 1300 Building, immediately relocate to the RCA building, and withhold the back rent indefinitely. Specifically, Farris testified:

  My leases were not up in the [1300] building until
  August[, 1992]. I was renegotiated in March and
  April[, 1992]. And as far as I was concerned, I was
  forced to sign that lease, "Or we're moving to the
  RCA Building and you will not get your money."

See Farris Dep. (Aug. 12, 1998) at 335.

Sasala testified that the County could not immediately relocate its offices to the RCA building in April, 1992. See Sasala Dep. at 64-66. Farris testified that after he agreed to the County's terms in the renegotiated 1300 Building leases, Mitchell apologized to him for misleading him about the availability of the RCA building. See Farris Dep. (Aug. 4, 1998) at 30-32. Mitchell denied making any such apology. See Mitchell Dep. at 211.

While Farris and the County were renegotiating the 1300 Building lease, Farris was being solicited for political contributions. Willis testified that he "received a phone call from Defendant, Phyllis Pearl [(`Pearl')]." See Pl. R. 56.1 at 15. "Pearl advised that she was from Jack Gallagher Associates and was calling on behalf of Rob Andrews for Congress." Id. Willis testified that "Pearl referenced the tickets that were mailed to Farris and his `conflict with the County.'" Id. (quoting Willis Dep. (Sept. 24, 1998) at 92-95). "Pearl requested that Farris make a $3,000 contribution and advised if she got a check for $3,000 that day, she could have Farris's rent paid by the end of the day." Id. Willis testified that "Pearl followed up a couple days later in person." Id. Farris did not make the contribution. See id.

Pearl testified at her February 25, 1999, deposition that she did make fund-raising calls for the CCDC, but that she did not solicit a $3000 contribution from Farris, promising to have his overdue rent paid. See Deposition of Phyllis Pearl (dated Feb. 25, 1999) at 66, 84, 90. Specifically, Pearl testified:

  Q. [By Mr. Valenti] Do you know if you ever spoke to
  Mark Willis on the phone?
  A. I have no idea. I'd say no. I mean, he never
  identified himself. You know, I call an office. I
  don't know who I'm talking to. I ask for the person I
  need to speak to, they say, they're not here. I hang
  up.
  Q. Do you have any specific recollection of speaking
  to anyone at Admiral Wilson Boulevard in response to
  a call that you were placing for the CCDC?

A. No.

  Q. You've never said to anyone that their
  contribution would be noticed by the party?
  A. . . . I would probably say to somebody, I'm sure
  people will notice if you're helpful. That's probably
  the words I would use
  Q. [Did you ever speak] with Judy Palombi concerning
  any rent issues with Admiral Wilson Boulevard?

A. No.

Id. at 66-67, 88-90. Pearl further testified that she did not "fund-raise" on behalf of Congressman Andrews. See id. at 103.

In February, 1992, Farris made a $1,500 contribution to the CCDC. See Exhibits in Support of Brief of Summary Judgment on Behalf of Norcross and the CCDC, Exh. R, (Check (dated Feb. 25, 1992)). Farris testified that Theresa Kirby, a loan officer at Commerce Bank, had convinced him to make the contribution. See Farris Dep. (Aug. 12, 1998) at 499. The contribution was for the purchase of three tickets to a roast held by the CCDC in Norcross's honor. See id.; see also Exhibits in Support of Brief of Summary Judgment on Behalf of Norcross and the CCDC, Exh. R, (Check (dated Feb. 25, 1992)).

Farris and Willis testified that, even after Farris agreed to the renegotiated lease terms for the 1300 Building, "the County continued to withhold the rent that it owed Farris" on the 1350 Building. See Pl. R. 56.1 at 15. Both Farris and Willis repeatedly telephoned Bezich, the Chief Operating Officer and Treasurer of Camden County, inquiring about the overdue rent. See id. at 15-16; see also See Deposition of Louis Bezich (dated Feb. 23, 1999) at 35-38. Bezich testified that he had no recollection of receiving any such calls. See Bezich Dep. at 66. Willis also repeatedly called Mitchell to inquire about the rent. See id. at 16. Willis secretly tape recorded a number of his telephone conversations with Mitchell. See id.; see also Pl. Sanctions Opp. Exh. 13 (Transcript of Tape Recorded Conversations).

All of Farris's leases with the County contained a provision entitled "Obligation Subject to the Availability and Appropriation of Funds." See Valenti Cert., Exh. 13, ¶ 27. The provision provided, in relevant part:

  "[I]t is mutually understood and agreed between the
  parties that all financial obligations undertaken by
  the [County] under [the 1350 Building] lease
  including, but not limited to rent, are made subject
  to the availability and appropriation of sufficient
  funds by the by the Board of Chosen Freeholders . .
  ."

Id. Exercising this provision, the County terminated the 1350 Building lease, effective May 31, 1992. See Valenti Cert., Exh. 14; see also Certification of John T. Coyne, Esq. (filed Apr. 30, 1999), Exh. E. In April, 1992, the County remitted to Farris the rent due under the 1350 Building lease for the months of January, February, and March, 1992. See Compl., ¶ 62.

In November, 1992, Farris and the County entered into another lease for the 1350 Building. See Valenti Cert., Exh, 17. The renegotiated 1350 Building lease contained the reduced rental rate and thirty-day termination provisions that the County had required in the renegotiation of the 1300 Building lease. See id. Farris testified that, prior to entering into the renegotiated 1350 Building lease, "[i]n the fall of 1992, [he] was visited by Stephen Umbrell, the Executive Vice President of Commerce Bank." See Pl. R. 56.1 at 19; see also Valenti Cert., Exh. 16 (Certification of Rahn J. Farris (dated Jan. 29, 1999), ¶ 3). At the time, Commerce Bank held notes secured by mortgages on the 1300 and 1350 Buildings. See, e.g., Farris Dep. (Aug. 12, 1998) at 387. "Mr. Umbrell requested that Farris execute an assignment of lease payments for the 1350 Building in favor of Commerce Bank." See Pl. R. 56.1 at 19. "Farris advised Umbrell that Camden County had vacated the building and that there was no longer a tenant in the 1350 building." Id. Umbrell insisted, and Farris acquiesced in executing an assignment of rents in favor of Commerce Bank. See id. The County, after entering into the renegotiated lease with Farris, made its rental payments "directly to Commerce Bank" under the assignment of lease payments. Id.

On February 2, 1994, unable to make the payments on the mortgages covering the 1300 and 1350 Buildings, as well as the commercial loans Farris had obtained for unrelated business ventures, and judgment liens filed by numerous creditors, Farris filed for bankruptcy. See Valenti Cert., Exh. 14 (Discharge of Debtor (dated June 2, 1997)). On June 2, 1997, Farris's debts were discharged by order of the United States Bankruptcy Court for the Eastern District of Pennsylvania. See id.; see also County of Camden v. Rahn J. Farris, Civil Action No. 97-3297(SMO), unpubl. slip op. (D.N.J. Jun. 29, 1998).

On October 6, 1997, Farris filed a thirty-five count Complaint*fn3 in this Court alleging both federal and pendent state law causes of action against Defendants, Camden County, Norcross, the CCDC, Louis Bezich, Thomas Mitchell, Judy Palombi, and Phyllis Pearl. See Compl., ¶¶ 6-17.*fn4 On December 14, 1998, Magistrate Judge Joel B. Rosen granted Farris's motion to voluntarily dismiss Counts XX through XXXV of the Complaint, namely, Farris's claims for violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962, and its New Jersey analogue, N.J. Stat. Ann. § 2C:41-2. See Order of Mag. Judge Rosen (filed Dec. 14, 1998). Farris's remaining counts include claims for: (1) rescission or reformation of the renegotiated 1300 and 1350 Building leases on the basis of economic duress, fraud, misrepresentation, and unconscionability, Counts I-III; (2) breach of the original 1300 and 1350 Building leases, as well as the renegotiated 1300 Building lease, Counts IV-V, VII, XI; (3) common law fraud against the County, Bezich, Mitchell, and Palombi, Count VI; (4) tortious interference with contract and prospective economic advantage against Bezich, Mitchell, and Palombi, Count VIII; (5) tortious interference with contract and prospective economic advantage against Norcross and the CCDC, Counts IX-X; (6) civil conspiracy to tortiously interfere and defraud against Norcross, the CCDC, Bezich, Mitchell, and Palombi, Count XII; (7) civil conspiracy to defraud against Camden County, Norcross, and the CCDC, Count XIII; (8) civil conspiracy to tortiously interfere against Norcross, the CCDC, and Pearl, Count XIV; and (9) civil conspiracy to extort political contributions and to deprive Farris of his real property against Norcross, the CCDC, Bezich, Mitchell, Palombi, Pearl, and the County, Counts XV-XIX. See Compl, Count I-XIX.

On December 8, 1998, Norcross and the CCDC moved, pursuant to 28 U.S.C. § 1927 and the Court's inherent powers, for the imposition of sanctions and attorneys' fees against counsel for Farris, contending that Farris's claims against Norcross and the CCDC lacked an arguable basis in law and fact, and that counsel for Farris had misrepresented the facts of the case in Farris's Rule 26 initial disclosures. See Notice of Motion (filed Dec. 8, 1998). While that motion was pending, on February 5, 1999, Norcross and the CCDC also moved for summary judgment on all claims asserted against them. See Notice of Motion (filed Feb. 5, 1999). Farris opposed the motion on the merits and filed an application pursuant to Rule 56(f) to adjourn Norcross's and the CCDC's motion until the conclusion of discovery.*fn5 See Rule 56(f) Certification of Jerald R. Cureton, Esq. (filed Feb. 5, 1999).

After the close of discovery, on April 22, 1999, Mitchell filed a Notice of Intent to submit a dispositive motion. See Notice of Intent (filed Apr. 22, 1999). Subsequently, on May 10, 1999, Mitchell filed a motion for summary judgment on all claims. See Notice of Motion (filed May 10, 1999). Likewise, on April 30, 1999, Camden County filed a motion for summary judgment on all claims asserted against it.*fn6 See Camden County's Notice of Motion (filed Apr. 30, 1999). Farris opposed both motions contending that genuine disputed issues of material fact exist, precluding the entry of summary judgment in favor of Mitchell and the County.

III. LEGAL STANDARD GOVERNING MOTIONS FOR SUMMARY JUDGMENT

"On a motion for summary judgment, the court must determine whether the evidence shows that `there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Abraham v. Raso, 183 F.3d 279, 287 (3d Cir. 1999) (citing Fed.R.Civ.P. 56(c)). "Any factual dispute invoked by the nonmoving party to resist summary judgment must be both material in the sense of bearing on an essential element of the plaintiff's claim and genuine in the sense that a reasonable jury could find in favor of the nonmoving party." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In opposing summary judgment, a party "must do more than simply show that there is some metaphysical doubt as to material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), but a court should not prevent a case from reaching a jury simply because the court favors one of several reasonable views of the evidence. Abraham, 183 F.3d at 287. "[T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249, 106 S.Ct. 2505; see also Abraham, 183 F.3d at 287. "Thus, while the nonmoving party must present enough evidence to demonstrate a dispute is genuine, all inferences in interpreting the evidence presented by the parties should be drawn in favor of the nonmoving party." Abraham, 183 F.3d at 287 (citing Boyle v. County of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998)). "Cases that turn crucially on the credibility of witnesses' testimony in particular should not be resolved on summary judgment." Id.

If the nonmoving party fails to oppose the motion by written objection, memorandum, affidavits and other evidence, the Court "will accept as true all material facts set forth by the moving party with appropriate record support." Anchorage Assocs. v. Virgin Islands Bd. of Tax Rev., 922 F.2d 168, 175 (3d Cir. 1990) (quoting Jaroma v. Massey, 873 F.2d 17, 21 (1st Cir. 1989)). Even where the non-moving party has failed to establish a triable issue of fact, summary judgment will not be granted unless "appropriate." Fed. R.Civ.P. 56(e); see Anchorage Assocs., 922 F.2d at 175. Rule 56(e) of the Federal Rules of Civil Procedure requires that the case be evaluated on its merits, with summary judgment being granted for the movant only if they are entitled to a judgment as a matter of law. See Anchorage Assocs., 922 F.2d at 175.

IV. DISCUSSION

A. Defendants' Motions for Summary Judgment

1. Norcross's and the CCDC's Motion for Summary Judgment and
  Application of the Coconspirator Exception to the Hearsay Rule
  set forth in Rule 801(d)(2)(E) of the Federal Rules of
  Evidence

a. Counts IX and X, Tortious Interference

In Count IX of the Complaint, Farris alleges that Norcross "directed, encouraged, and otherwise caused Defendant Camden County to breach its lease agreements with Plaintiff by failing to make rent payments for months at a time and by vacating the 1350 Building prior to the end of the 1350 Building Lease." See Compl., ¶ 139. Farris also alleges in Count IX that Norcross "directed, encouraged, and otherwise caused Defendant Camden County to engage in coercive and fraudulent tactics so as to cause Plaintiff to enter the [renegotiated leases]." Id., ¶ 140. Farris alleges that the "actions of Norcross were intentional and malicious and were engaged in for various reasons including to facilitate a scheme to acquire Plaintiff's 1300 Building, to coerce and encourage Plaintiff into making political contributions, and to retaliate against Plaintiff's prior failures to make contributions . . ." Id., ¶ 141. In Count X, Farris makes the same allegations against the CCDC. See id., Count X.

In support of their motion for summary judgment, both Norcross and the CCDC contend that "plaintiff has no evidence whatsoever that Norcross or the [CCDC] interfered in any way with [Farris's] lease agreements with the County of Camden." See Norcross's and the CCDC's Brief in Support of Motion for Summary Judgment (filed Feb. 5, 1999) ("CCDC's Brief") at 19. In addition, in response to Farris's contention that the hearsay statements of County employees are sufficient to create a dispute of material fact, Norcross and the CCDC contend that these statements are inadmissible to prove that Norcross and the CCDC tortiously interfered with Farris's leases with the County. See Reply Brief of Norcross and the CCDC (filed Feb. 5, 1999) at 6-11.

Under New Jersey law, "[t]o state a claim for tortious interference with business relationships, a plaintiff must allege that: (1) it had a continuing or prospective economic relationship or reasonable expectation of economic advantage; (2) the defendant knew of such relationship of expectancy; (3) the interference and harm inflicted were done intentionally and with "malice" in the sense of conduct that is wrongful and without justification or excuse; (4) if not for the interference, it was reasonably probable that plaintiff would have realized its economic advantage; and (5) the plaintiff was injured as a result of defendant's conduct." Eli Lilly and Co. v. Roussel Corp., 23 F. Supp.2d 460, 493-94 (D.N.J. 1998) (citing Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 186 (3d Cir. 1992)); see Varrallo v. Hammond, Inc., 94 F.3d 842, 848 (3d Cir. 1996); Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 751-52, 563 A.2d 31 (1989); see also Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1167 (3d Cir. 1993); Lithuanian Commerce Corp. v. Sara Lee Hosiery, 179 F.R.D. 450, 482-83 (D.N.J. 1998).

Norcross and the CCDC concede for the purposes of this motion that "plaintiff's leases with the County of Camden created a reasonable expectation on the part of plaintiff that he would be paid some amount of rent to the end of [the] term." See CCDC's Brief at 19. These defendants, however, contend that Farris has failed to produce any admissible evidence of the remaining elements of a claim for tortious interference. See id.

In response to this contention, Farris contends that the statements of Mitchell, Palombi, Maguire and Pearl, are admissible to prove that Norcross and the CCDC tortiously interfered with Farris's leases with the County. See Plaintiff's Brief in Opposition to Norcross's and the CCDC's Motion for Summary Judgment (filed Feb. 5, 1999) at 30-31, 33-34. Specifically, Farris contends that "[t]he testimony of Willis and Farris is that they were informed by Maguire, Palombi[,] and Mitchell, on various occasions that the withholding of rents and the renegotiation of [Farris's] leases [were] at the direction of Norcross because Farris failed to make the [political] contributions requested of him." Id. at 31. Norcross and the CCDC contend to the contrary that the statements of Palombi, Mitchell, and Maguire, are inadmissible hearsay. See Reply Brief of Norcross and the CCDC at 6-11.

It is well settled that, in opposing a motion for summary judgment, "[a] plaintiff . . . must point to admissible evidence that would be sufficient to show all elements of a prima facie case under applicable substantive law." Clark v. Modern Group Ltd., 9 F.3d 321, 326 (3d Cir. 1993) (citation omitted). Consistent with this well settled principle of law, in Philbin v. Trans. Union Corp., 101 F.3d 957 (3d Cir. 1996), the Third Circuit noted that "a hearsay statement that is not capable of being admissible at trial should not be considered on a summary judgment motion[.]" Blackburn v. United Parcel Service, Inc., 179 F.3d 81, 95 (3d Cir. 1999) (construing Philbin, 101 F.3d at 961 n. 1). When a party seeking to avoid summary judgment has pointed to arguably hearsay evidence in the record, a District Court "must first determine whether any [of the non-moving party's] evidence . . . is admissible, based as it is on hearsay and, in some instances, multiple hearsay." Blackburn, 179 F.3d at 95 (citing Philbin, 101 F.3d at 961 n. 1). "Then, [a District Court] must determine whether the hearsay evidence that might be admissible at trial is sufficient to defeat [the moving party's] summary judgment motion or whether judgment [should] properly [be] entered in favor of [the moving party]." Id. (citation omitted).

As a preliminary matter, I note that Farris contends that any statements made by Palombi, Mitchell, and Maguire, made within the scope of their employment, are admissible against the County as admissions by a party opponent under Rule 801(d)(2)(D) of the Federal Rules of Evidence. See Plaintiff's Brief in Opposition to Norcross's and the CCDC's Motion for Summary Judgment (filed Feb. 5, 1999) at 33. Building on this contention, Farris argues that these statements are also admissible against Norcross and the CCDC under Rule 801(d)(2)(E) because he has alleged that Norcross, the CCDC, and the County are coconspirators. Id. These contentions are without merit in light of this Court's conclusion that as a matter of law the County cannot conspire with Norcross and the CCDC to tortiously interfere with Farris's leases, to extort political contributions, to interfere with Farris's real property, or to defraud. See § IV.A.2.f-j infra.

Therefore, because Rule 801(d)(2)(D) cannot serve as a basis for the admissibility of Mitchell's, Palombi's and Maguire's statements against Norcross and the CCDC, Farris must demonstrate that these statements satisfy the requirements of Rule 801(d)(2)(E),*fn7 independent of the County's alleged role as a coconspirator. In addition, because Farris has not alleged that Maguire was a party to the civil conspiracy to tortiously interfere with his contractual and prospective contractual relationship with the County, Rule 801(d)(2)(E) cannot serve as the basis for the admissibility of Maguire's hearsay statements.*fn8 Farris has failed to assert an alternative basis for the admissibility of Maguire's statements, either under Rule 801, as non-hearsay, or the exceptions to the hearsay rule in Rules 803 and 804. See note 6 and accompanying text. Therefore, because Maguire's statements are clearly hearsay "that is not capable of being admissible at trial, [his alleged statements shall] not be considered [in resolving this] . . . summary judgment motion[.]" Blackburn, 179 F.3d at 95 (citing Philbin, 101 F.3d at 961 n. 1).

Turning to the alleged statements of Palombi and Mitchell, Farris contends that these statements, as well as those of Phyllis Pearl, are admissible under Rule 801(d)(2)(E) of the Federal Rules of Evidence. The specific statements at issue are set forth below.

Willis testified at his September 22, 1998, deposition that:

  Late, I believe in '91ish, certainly early '92ish[,
  Farris received tickets to a political fund raiser].
  [When] all that had started to surface, [Palombi]
  came in and made a representation that certainly it
  would be in our best interest to buy tickets. She had
  a letter that . . . she read . . . to me. She said it
  was from the chairman. And I joked with her, Frank
  Sinatra, and she said, "No George Norcross."
  She basically said they were going to move from the
  facility . . . It was basically that, she read the
  letter, that they would virtually move from the
  building . . . if Rahn didn't contribute. [After] she
  read it, she folded the letter up, I remember she put
  it inside a day planner. We sat there and talked.
  She basically made it very clear. The only time she
  used [Norcross's] name was for that particular
  letter. She's been to headquarters, they're expecting
  Rahn to put out, it was kind of unavoidable. She was
  making it very clear that those tickets on Rahn's
  desk weren't going to go away, I mean they just
  weren't going to go away . . . In terms of the
  tickets she made it very clear that it was in Rahn's
  interest just to buy them.
  Q. [By Mr. Timpone] She said it was in Rahn's best
  interest to buy the tickets?

A. [By Mr. Willis] Yes.

  Q. Did she link the continuing idea of the County
  vacating?

A. Right. . . .

  Q. Did she explain to you how your contributions to
  the fund . . . would stop [her] Program from moving
  out?
  A. She just basically made it very clear at that
  point in time we'd be on-board. . . .
  Q. Did she say if you don't buy these tickets, [her
  program] would move [out of the 1300 Building]?

A. Yes. . . .

See Willis Dep. (Sept. 22, 1998) at 116-126.

At his September 24, 1998, deposition, Willis testified that he received, on behalf of Farris, a telephone solicitation for political contributions from Pearl. See Willis Dep. (Sept. 24, 1998) at 94. Willis testified:

Q. [By Mr. Tambussi] Tell me what Phyllis Pearl said?

  A. [By Mr. Willis] Regarding the collection of our
  rent, that $3000 could facilitate the rent . . .

Q. When did Phyllis Pearl tell you?

A. Early '92.

Q. In person or on the telephone?

A. Once in person, once on the phone.

Q. What did she say to you?

  A. It was a follow-up of our conversation on the
  phone regarding the $3000.

Q. So she called you first?

  A. It was a solicitation on the phone first . . .
  Basically identified who she was, where she was from.
  [She said she was Phyllis Pearl] [f]rom Jack
  Gallagher Associates. And she was calling on behalf
  of Rob Andrews for Congress . . . She basically was
  aware of the tickets that were mailed to us . . .
  I don't remember the exact pitch. She caught me off
  guard . . . She was aware . . . or our difficulty [in
  collecting the money owed from the County].
  And she immediately solicited, . . . "Would it be
  possible to get a check made out on behalf of Rob
  Andrews[.]"
  She basically said to me, "If I get the $3000 today,
  I could get your rent by the end of the day[.]" . . .
  That was as best I could tell you the statement she
  made to me.
  Q. Do you have any facts that George Norcross
  directed her to make that call?

A. No.

  Q. Do you have any facts . . . that any member of the
  [CCDC] directed Phyllis Pearl to make that call?

A. . . . No.

See id. at 90-103. Willis further testified that Pearl met him at his office a short time after her telephone solicitation to see "if [Farris had] decided[] he would give the $3000 for support of Rob Andrews[.]" Id. at 106.

In addition, Farris testified that Mitchell stated that Norcross was behind the County's failure to pay his overdue rent. See Farris Dep. (Sept. 16, 1998) at 52-53. Specifically, Farris testified:

  Q. [By Mr. Zarrillo] Did anyone tell you that Mr.
  Bezich was not signing your [rent] checks because of
  your failure to make political contributions?

A. Yes

Q. Who?

A. Tom Mitchell.

  Q. Tell me the exact details of that conversation
  with Mr. Mitchell?
  A. I said, "What does [Sasala] mean it's a political
  thing?" And [Mitchell] said to me, "Number 1, Lou
  Bezich doesn't have enough brains to not sign your
  check on his own, he got that from Mr. Norcross . . .
  [M]aybe the next time they want you to give it might
  be easier to give."
  Q. And he attributed the failure to make the check
  payment to Mr. Norcross?

A. Correct.

See Id. Farris also testified that Mitchell stated to him that Norcross had directed the County to renegotiate Farris's leases. See Farris Dep. (Aug. 12, 1998) at 332.

In their deposition testimony, Mitchell, Palombi, and Pearl each denied having made the statements Farris and Willis attribute to them. See § I supra. Norcross testified at his deposition that he did not direct County officials to withhold Farris's rent payments, to renegotiate Farris's leases, or coerce Farris into making political contributions. See Norcross Dep. at 115-17, 121-22, 149-54, 155.

Before I can consider whether this conflicting deposition testimony constitutes a genuine disputed issue of material fact, sufficient to warrant the denial of Norcross's and the CCDC's motion for summary judgment, I must first determine whether the statements attributable to Palombi, Pearl, and Mitchell are admissible under the Federal Rules of Evidence. Blackburn, 179 F.3d at 95. Farris contends that these statements are admissible under Rule 801(d)(2)(E) of the Federal Rules of Evidence, as "statement[s] by a coconspirator of a party during the course and in furtherance of the conspiracy[.]" See Fed. R. Ev. 801(d)(2)(E).

Rule 801(d)(2)(E) provides, in relevant part:

  A statement is not hearsay if . . . [t]he statement
  is offered against a party and is . . . (E) a
  statement by a coconspirator of a party during the
  course and in furtherance of the conspiracy. The
  contents of the statement shall be considered but are
  not alone sufficient to establish . . . the existence
  of the conspiracy and the participation therein of
  the declarant and the party against whom the
  statement is offered under subdivision (E).

See Fed. R. Ev. 801(d)(2)(E). The current rule is the result of an amendment in 1997 adopted to conform the rule to the United States Supreme Court's decision in Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987). See Fed. R. Ev. 801, Advisory Committee Note to 1997 Amendment. The Advisory Committee Note to the 1997 Amendment states:

  First, the amendment codifies the holding in
  Bourjaily by stating expressly that a court shall
  consider the contents of a coconspirator's statement
  in determining "the existence of the conspiracy and
  the participation therein of the declarant and the
  party against whom the statement is offered."
  According to Bourjaily, Rule 104(a) requires these
  preliminary questions to be established by a
  preponderance of the evidence. Second, the amendment
  resolves an issue on which the Court had reserved
  decision. It provides that the contents of the
  declarant's statement do not alone suffice to
  establish a conspiracy in which the declarant and the
  defendant participated. The court must consider in
  addition the circumstances surrounding the statement,
  such as the identity of the speaker, the context in
  which the statement was made, or evidence
  corroborating the contents of the statement in making
  its determination as to each preliminary question.

See id.

In United States v. Ellis, 156 F.3d 493 (3d Cir. 1998), the Third Circuit discussed the requirements for satisfying Rule 801(d)(2)(E). ...


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