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June 20, 2001


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


This matter comes before the Court on a motion by defendant United States Gypsum Company ("Gypsum") for partial summary judgment against plaintiff, the Prudential Insurance Company of America ("Prudential") on the grounds of res judicata or lack of subject matter jurisdiction; for summary judgment dismissing Prudential's Racketeer Influenced and Corrupt Organizations Act ("RICO") claims as barred by the statute of limitations; and for summary judgment dismissing Prudential's RICO claims on substantive grounds. For the reasons stated below, Gypsum's requests are granted in part and denied in part.

I. Background

In 1987, Prudential brought a complaint against seven former manufacturers of asbestos-containing materials ("ACMs") to recover costs for monitoring, removing and dealing with ACMs used in Prudential's buildings. Prudential's complaint originally encompassed sixty-one buildings and now includes eighteen buildings. The current active defendants in the action are U.S. Gypsum and United States Mineral Products Company ("USMP"). Prudential also has outstanding claims against Asbestospray Corporation ("Asbestospray")*fn1 and W.R. Grace & Co.-Conn ("Grace"). Grace and Gypsum filed papers joining their defenses of the motions presently before this court. Grace, however, filed a voluntary petition for relief pursuant to Chapter 11, Title 11 U.S.C. on April 2, 2001, prior to oral argument of this motion. As a result of provisions of 11 U.S.C. § 362(a), this matter is automatically stayed against Grace. Having found no unusual circumstances that would cause the matter to be stayed as to the remaining co-defendants (See McCartney v. Integra National Bank North, 106 F.3d 506, 510 (3d Cir. 1997)), this matter will proceed as to the remaining defendants.

Subject matter jurisdiction for Prudential's original Complaint was based solely on a claim arising under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). The court dismissed Prudential's CERCLA claim on March 28, 1989, but granted Prudential's motion for leave to file a First Amended Complaint that added nine new counts, including a RICO claim, which then became the sole basis for federal jurisdiction.

U.S. Gypsum and Grace had previously defended against a class action in which Prudential was initially determined to be a member of the plaintiff class, Prince George Center, Inc., et al. v. United States Gypsum Co. et al., 1997 WL 1433730, No. 5388 (Pa.Com.Pl.) (hereinafter "Prince George Center"), litigated in the state courts of Pennsylvania. Prince George Center settled claims relating to buildings that "were leased in whole or in part to the United States or any agency thereof at any time between April 30, 1984 and December 22, 1994 inclusive and contained asbestos-containing products at any time during such period. . . ." Plaintiff's Second Brief in Opposition to Motions by Defendants For Partial Summary Judgment, p4. Prudential subsequently petitioned the Pennsylvania Court of Common Pleas to be excluded from the class. Prudential's arguments included assertions that it had inadvertently failed to send a letter opting out of the class; that it was unaware of its inclusion in the class settlement; and that the defendants knew of the Prudential's failure to opt out but did not notify either this court or Prudential of the settlement prior to its finalization. Prudential appealed the Court of Common Plea's adverse decision to the highest court of Pennsylvania and to the United States Supreme Court without success.

In the motions currently before the court, Gypsum asserts that Prudential's claims as to eight of the eighteen buildings are precluded by the Prince George Center class action.*fn2 Gypsum also asserts that under the Rooker-Feldman doctrine, this court lacks subject matter jurisdiction to hear Prudential's claims in this case. Prudential responds that Gypsum is estopped from using the Prince George Center judgment in this case for three reasons: because Gypsum stipulated to try claims related to all eighteen buildings in this court; because Gypsum breached its ethical duties; and because Gypsum made affirmative misrepresentations in interrogatory answers. Prudential further contends that Gypsum waived the use of the Prince George Center judgment in this action. Even if this court finds that Gypsum is not estopped and did not waive use of the Prince George Center decision, Prudential argues that Gypsum has not proven that the eight buildings fall within the Prince George Center class.

Gypsum also contends that the statute of limitations had run on Prudential's RICO claim, the only claim tying the case to federal court, before Prudential filed its case in October of 1987. U.S. Mineral joins Gypsum in this motion. Prudential responds that it only learned of its injuries when it undertook abatement of asbestos in conjunction with the demolition of one of its buildings in 1984, and only understood the extent of its injuries after commissioning a study of the ACMs in its holdings in 1985. Prudential also claims that the statute of limitations period was tolled by Gypsum's fraudulent concealment of the hazards of ACM.

This court will first address Gypsum's claims as to the court's subject matter jurisdiction and the preclusive effects of the Prince George Center judgment on this case. The court will then turn to Gypsum's statute of limitations claims.

II. Subject Matter Jurisdiction and Preclusion

A. Summary Judgment Standard

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment may be granted only if the pleadings, supporting papers, affidavits, and admissions on file, when viewed with all inferences in favor of the nonmoving party, demonstrate that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. See also Todaro v. Bowman, 872 F.2d 43, 46 (3d Cir. 1989); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir.), cert. dism'd, 483 U.S. 1052, 108 S.Ct. 26, 97 L.Ed.2d 815 (1987). Put differently, "summary judgment may be granted if the movant shows that there exists no genuine issues of material fact that would permit a reasonable jury to find for the nonmoving party." Miller v. Indiana Hospital, 843 F.2d 139, 143 (3d Cir.), cert. denied, 488 U.S. 870, 109 S.Ct. 178, 102 L.Ed.2d 147 (1988). An issue is "genuine" if a reasonable jury could possibly hold in the nonmovant's favor with regard to that issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if it influences the outcome under the governing law. Id. at 248, 106 S.Ct. 2505.

The party seeking summary judgment always bears the initial burden of production, i.e., of making a prima facie showing that it is entitled to summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This may be done either by demonstrating there is no genuine issue of fact and that as a matter of law, the moving party must prevail or by demonstrating that the moving party has not produced evidence relating to an essential element of the issue for which it bears the burden of proof at trial. Id. at 322-23, 106 S.Ct. 2548. Once either showing is made, the burden shifts to the nonmoving party who must demonstrate facts supporting each element for which it bears the burden of proof as well as establish the existence of genuine issues of material fact. Id. at 324, 106 S.Ct. 2548.

At the summary judgment stage, however, a court may not weigh the evidence or make credibility findings-these tasks are left to the factfinder. Petruzzi's IGA v. Darling-Delaware, 998 F.2d 1224, 1230 (3rd Cir. 1993). Therefore, to raise a genuine issue of material fact, "`the [summary judgment] opponent need not match, item for item, each piece of evidence proffered by the movant,' but simply must exceed the `mere scintilla' standard." Id. See also Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ("the mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmovant].")

B. Rooker-Feldman

Gypsum contends that under the Rooker-Feldman doctrine, Prudential is barred from bringing its claims of estoppel and waiver. The Rooker-Feldman doctrine holds that a federal district court does not have jurisdiction to review a final adjudication of a state court or to consider claims that are inextricably intertwined with the state court decision. Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); In re: General Motors Corp. Pick-Up Truck Fuel Tank Products Liability, 134 West Page 650 F.3d 133 (3d Cir. 1998). The Third Circuit has found that Rooker-Feldman is a jurisdictional doctrine grounded in the principle that appellate jurisdiction over state court decisions lies with the Supreme Court of the United States, not with federal district courts. Parkview Associates Partnership v. Lebanon, 225 F.3d 321, 329 (3d Cir. 2000). As such, it is distinct from preclusion doctrines, which rest upon the Full Faith and Credit Statute. Id. Moreover, as a jurisdictional doctrine, Rooker-Feldman "must override preclusion doctrine where it applies." Id. Therefore, this court will first consider whether the Rooker-Feldman doctrine applies in this case.

Gypsum contends that because the Pennsylvania Court of Common Pleas already decided issues essential to Prudential's claims of estoppel and waiver, if this court were also to hear and decide these claims, it would effectively be reviewing and potentially reversing the Pennsylvania court. Prudential responds that it is not seeking reversal of the Pennsylvania judgment and grants the Pennsylvania judgment preclusive effect in all other future proceedings. Instead, Prudential attempts to demonstrate that the Pennsylvania decision should not be given preclusive effect in the instant case because it would not be given such effect under Pennsylvania law. Specifically, Prudential argues that, for purposes of this New Jersey action, the defendant waived the use of the Pennsylvania judgment and is estopped from the use of that judgment.

As Gypsum points out, the Pennsylvania court already made findings on the same issues that ground Prudential's claims of waiver and estoppel. Prudential is not, however, seeking relief from the Pennsylvania court's decision, but instead is seeking to determine whether Gypsum has waived or is estopped from asserting that the Pennsylvania opinion is res judicata. The doctrines of waiver and res judicata are not intended to provide relief for the plaintiff from prior judgments but rather to preclude the defendant from obtaining an inequitable result. Therefore, if this court were to determine that Gypsum has waived or is estopped from raising its claims in the instant action, this court's decision would not effectively reverse the Pennsylvania court's decision that Prudential may not opt out of the class action generally. Prudential would still be bound by the Pennsylvania decision, except where Pennsylvania law would find that the defendant should not be so bound. Unless this court would effectively reverse the state court's decision, the Rooker-Feldman doctrine is not implicated in this action.

Gypsum's attempt to analogize the facts of this case to those of GM Motors, in which the Rooker-Feldman doctrine precluded a district court from reversing a state court judgment, does not succeed. In the GM Motors case, the plaintiffs had been party to a class action, in which a district court's certification of the class was vacated and a settlement set aside. Rather than cure the defect in the certification, representatives of the parties proceeded to settle the class action in state court in Louisiana. Certain members of the plaintiff class sought relief from the Louisiana judgment in federal court, but the Third Circuit rejected their claim on the ground that "in order for us to grant appellants' requested relief, we would first have to determine that the state court judgment was erroneously entered. Rooker-Feldman bars exactly this sort of intermediate appellate review of state court judgments and divests this Court of subject matter jurisdiction of this appeal." GM Motors, 134 F.3d at 143.

C. Prudential's Claims of Estoppel and Waiver

As both parties agree, the decision of the Pennsylvania Court of Claims should be granted full faith and credit. See U.S. Gypsum's Memorandum of law, p24; Prudential's Brief, vol. I, p16. Section 1738 of chapter 28 of the United States Code Annotated provides that the judicial proceedings of any state shall be given full faith and credit "in every court within the United States." The U.S. Supreme Court has held that "many courts" encompasses federal courts. See Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980); Davis v. Davis, 305 U.S. 32, 40, 59 S.Ct. 3, 83 L.Ed. 26 (1938). Therefore, this court must give the Pennsylvania court's final judgment the same effect as such judgment would be given in Pennsylvania, including claim preclusive and issue preclusive effect. See Balent v. City of Wilkes-Barre, 542 Pa. 555, 669 A.2d 309, 313 (1995).*fn3

The question then is which, if any, of the claims or issues currently before this court were previously decided by the Court of Common Pleas. In Pennsylvania, issue preclusion applies if:

(1) the issue decided in the prior adjudication was identical with the one presented in the later action; (2) there was a final judgment on the merits; (3) the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication and (4) the party against whom it is asserted has had a full and fair opportunity to litigate the issue in question in a prior action.

Greenleaf v. Garlock, Inc. 174 F.3d 352, 357-58 (3d Cir. 1999).

Prudential claims that Gypsum is estopped from using the Prince George Center judgment in this action for three reasons. First, by signing the Pretrial Order in March of 1996 in this matter and failing to notify this court of the Prince George Center Settlement before September of 1996, Prudential contends that Gypsum stipulated to try claims related to all eighteen buildings. Second, Prudential claims that Gypsum is estopped due to its breaches of two rules of professional conduct, RPC 3.3 and RPC 1.7, by failing to disclose to this Court the existence of the Prince George Center settlement and by failing to advise Prudential of a conflict of interest on the part of Gypsum's law firm, Morgan, Lewis & Bockius, ("MLB"), respectively. Third, Prudential asserts that Gypsum is estopped because it made affirmative misrepresentations in interrogatory answers. Prudential also argues that Gypsum waived the use of the Prince George Center judgment when it continued to litigate this case after entering into settlements in the Pennsylvania case.

Gypsum argues, however, that in the Prince George Center action, Prudential litigated certain of the issues that underlie Prudential's estoppel and waiver claims in this action. Prudential correctly asserts that only this court can determine whether the defendant's conduct waives or estops it from use of the Prince George Center judgments in this action. If the issues underlying estoppel and waiver have already been decided in another court of competent jurisdiction, however, then this court must grant those decisions full faith and credit.

This court finds that least one of Prudential's grounds for estoppel was litigated and decided in the Prince George Center action. Specifically, Prudential contended that Gypsum violated RPC 3.3 by not revealing the existence of the Prince George Center settlement to the Newark court before the final settlement had been entered. The Court of Common Pleas specifically ruled that Gypsum did not violate RPC 3.3. See Prince George Center, 33 Phila.Co.Rptr. 151, 170-172, 1997 WL 1433730 (1997). In its decision, the Court of Common Pleas referenced Prudential's claim that it was "sand-bagged" by the defendant's vigorous litigation of the New Jersey action and rejected "this specious argument." Prince George Center at 22. According to the court: "To the extent [Prudential] operated in the dark, it pulled the curtain down on itself." Prince George Center at 26. Therefore, the court concluded that since Prudential and not the defendant's counsel had a duty to track the Prince George Center action, defense counsel did not have a duty to report the action to the Newark court at all. According to that court, "Since defendants' counsel had no duty to speak, there was no necessity for them to make disclosure which is a prerequisite for application of Rules 3.3(b) and 4.1." Id. at 25-26. Although the Pennsylvania court's ruling appears to rest on that court's evaluation of the duties of respective counsel to monitor the Prince George Center settlement, Prudential contends that the Pennsylvania court's ruling would have been different under New Jersey law because New Jersey enforces a uniquely strict duty of disclosure. If it is true that the instant court would apply a different legal standard, then Prudential's argument is not precluded. See Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4417 (indicating that differences in legal standards defeat claims of preclusion, even though the factual setting of two suits in the same.) Therefore, this court will consider Prudential's claim under New Jersey's standard for RPC 3.3. This court finds, however, that application of New Jersey's law concerning RPC 3.3 does not alter the fact that ultimately Prudential and not the defendant had the duty to report the Prince George Center settlements to this court.

Rule 3.3, which defines an attorney's duty of "Candor Towards the Tribunal", provides:

(a) A Lawyer shall not knowingly:

(1) make a false statement of material fact or law to a tribunal; [or]. . . .
(5) fail to disclose to the tribunal a material fact with knowledge that the tribunal may tend to be mislead by such failure.

RPC 3.3(a)(1),(5). These ethical rules apply in the New Jersey federal district court pursuant to Local Civil Rule 103.1. As Prudential points out, New Jersey courts require an affirmative duty of disclosure and have held that such disclosure is superior to the attorney's duties to his clients. See Crispin v. Volkswagenwerk, A.G., 96 N.J. 336, 476 A.2d 250 (1984); Itel Containers International Corp. v. Puerto Rico Marine Management, Inc., 108 F.R.D. 96, 104 (D.N.J. 1985) (quoting Van Berkel v. Fox Farm & Road Machinery, 581 F. Supp. 1248, 1251 (D.Minn. 1984)). While the cases Prudential cites each address fact patterns in which an attorney is sanctioned for failing to disclose a fact which would impact the court's determination of an issues (See Crispin, 96 N.J. 336, 476 A.2d 250; Matter of Stein, 97 N.J. 550, 483 A.2d 109 (1984); Kernan v. One Washington Park Urban Renewal Assoc., 154 N.J. 437, 713 A.2d 411 (1998); Matter of Norton, 128 N.J. 520, 608 A.2d 328 (1992)), the comments to RPC 3.3(a)(5) indicate that the disclosure obligation also applies to "facts relating the management of the case." 114 N.J.L.J. at Supp. 9 (July 19, 1984).

Prudential alleges that defense counsel had a duty to disclose to this court the existence of settlements in the Prince George Center action that could impact buildings in the New Jersey litigation, beginning with the initial entry of the settlement in March of 1996 and up to any time before the entry of the judgment finalizing that settlement in September of 1996 when Gypsum did notify the court of the settlement. Prudential asserts that the conferences and discovery that continued in that five and half month period were unnecessary in light of the settlement.

Nevertheless, while Gypsum may have speculated that Prudential had forgotten to opt out of the trial class and was not, therefore, aware that its litigation of the New Jersey action was in conflict with its position in the Prince George Center class action, there was no reason for Gypsum to be sure that Prudential was not simply waiting to opt out of the class action settlement, or that the Prince George Center settlement would even be entered. Indeed, Prudential belatedly filed its opt-out request from the first settlement class in Prince George Center, and the Pennsylvania court honored Prudential's belated request. Therefore, without knowledge of what Prudential would seek to do or what leeway the Pennsylvania court would allow Prudential in its participation in the Prince George Center action, Gypsum had a responsibility to continue to vigorously litigate the New Jersey action. Upon the final entry of the judgment, Gypsum notified this court of the conflict. Even then, Prudential attempted to continue to litigate the New Jersey action while it sought to be excluded from the Pennsylvania final judgment. See Transcript of Case Management Conference, Plaintiffs' Supporting Appendix Concerning the Prince George Motions, p. 453.

Only Prudential knew both of the conflicting actions and its intentions with regard to each. Its assertion that it forgot to opt out of the Prince George Center action, but that the Gypsum should have known of its intentions and informed this court of the potential conflict borders on the absurd. It seems clear from Prudential's arguments in its briefs and before the court, moreover, that Prudential is not seeking a remedy for the effect such non-disclosure had on this court so much as for the effect such non-disclosure had upon its own neglect of its responsibilities in the Prince George Center case. In light of the limited effect that such lack of notice had on the instant case's management and given Prudential's parallel duty of disclosure, this court does not find that Gypsum is estopped from raising the issue of res judicata on the grounds of this purported violation.

With respect to Gypsum's alleged stipulation to try claims related to 18 buildings and its allegedly misleading interrogatories, Prudential raised these claims in the Prince George Center litigation, but the Pennsylvania court did not clearly decide these issues.*fn4 Therefore this court will consider these claims on their merits.

This court does not agree that in entering the March 1996 pretrial order, Gypsum stipulated to try all 18 buildings in this action; nor does it find that Gypsum's answers to Prudential's interrogatories were misleading. Prudential bases its claim that Gypsum stipulated to the trial of 18 buildings in this action on two paragraphs of the March 1996 pretrial scheduling order, specifically, a paragraph indicating that the remaining claims in the litigation are related to 18 properties and a paragraph indicating that a date for a comprehensive trial addressing all issues relating to all 18 properties would be set on December 2, 1996. These paragraphs constitute neither a stipulation nor a waiver of Gypsum's rights.

As Gypsum points out, waiver is a "voluntary relinquishment of a known right evidenced by a clear, unequivocal and decisive act from which an intention to relinquish the right can be based." Country Chevrolet, Inc. v. Twp. of North Brunswick Planning Bd., 190 N.J. Super. 376, 380, 463 A.2d 960 (App. Div. 1983). In this case, no "clear, unequivocal and decisive act" is present in this case. The language of the March 1996 scheduling order cannot plausibly be read to reflect a "voluntary and deliberate" decision by Gypsum to forgo the pursuit of valid defenses to the claims against it. Instead, it establishes a schedule and the parties' current understanding of the remaining claims in the case. As this court discussed above, Gypsum did not know at the time it signed the March 1996 pretrial scheduling order whether Prudential would opt out of the trial class. This court declines to find that Gypsum should have anticipated Prudential's actions and committed itself to a litigation strategy, never mind that a scheduling order would memorialize such a commitment.

Likewise, Prudential's assertion that Grace or Gypsum made affirmative misrepresentations in their interrogatory answers itself misrepresents the inaccuracy of Grace's and Gypsum's responses. Prudential's Interrogatory 20 asked that defendants:

(a) Identify every litigation in which a party has alleged that asbestos containing material designated, manufactured, distributed or sold by your company was or is creating a unsafe or hazardous or potentially hazardous condition in a building.

(b) for each lawsuit, set forth

(i) the full caption, jurisdiction and docket number of the litigation in which the allegation was made;
(ii) attorneys of record for the party making the allegation;

(iii) the date the allegation was first made;

(iv) whether you admitted or denied the allegation;

(v) the date you first admitted or denied the allegation;
(v) whether that admission of denial was ever modified, amended, or supplemented and if so, set forth the date of each modifications, amendment or supplement and the details with respect thereto.

Plaintiff's Supporting Appendix Concerning the Prince George Motion, Vol. III, 515-516. Grace responded with a standard objection as well the required list, which included the Prince George Center case by name, court and ...

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