47 F. Supp.2d 223 (1999) | Cited 0 times | D. Rhode Island | April 19, 1999


Plaintiffs, owners of an office building, sought to lease theirbuilding to a department of the State of Rhode Island in the late 1980s.The State eventually chose another building, owned by several of thenamed defendants. In the wake of public revelations of officialcorruption reaching into the highest levels of state government,plaintiffs brought this action for civil damages resulting from the failedattempt to lease property to the State. This suit takes aim at the rivalbuilding owners, officials of the State, as well as attorneys and bankersinvolved in the lease. The plaintiffs' weapon of choice is the federalRacketeer Influenced and Corrupt Organizations Act,18 U.S.C. § 1961-68. ("RICO"). Riding the coattails of that solefederal claim are sundry state causes of action based upon statutoryprovisions and common law. At the heart of the RICO claim is theallegation that plaintiffs were denied State business because defendantswere participants in a complex scheme of rigging the building selectionprocess through bribery and extortion. This matter is now before the Courton Motions for Summary Judgment offered by several defendants. For thereasons stated below, the Motions are granted.


The context within which this dispute evolved represents a sordidchapter in recent Rhode Island history, one that is well-known tocitizens who have witnessed the conviction of a former governor for hisviolations of the public's trust. Revealed by this shameful episode was agovernment that often was for sale to the highest bidder. Althoughplaintiffs have produced volumes of evidence describing in sorrowfuldetail the particulars of this culture of bribery and corruption, giventhe current procedural posture of this case the facts essential toresolving these Motions may be summarized briefly.

In early 1988, the Rhode Island Department of Employment and Training1("DET") sought to acquire new office space for its headquarters to makeway for the planned construction of the Rhode Island Convention Center onthe site of the old DET offices in Providence, Rhode Island. At thattime, plaintiff John G. Laramee ("Laramee"), a Connecticut businessman,was the General Partner of The Lares Group II ("Lares"), a Rhode Islandlimited partnership that owned the Leesona Building in Warwick, RhodeIsland.

DET officials expressed some interest in the Leesona Building toLaramee and soon thereafter conducted several views of the site inFebruary and March 1988. According to Laramee, after reviewing thebuilding, DET officials indicated that the Leesona Building met theDepartment's needs. However, at no time did representatives of the Statecommit in any way to lease the Leesona Building. Furthermore, thesediscussions took place even before the State had prepared official publicbid specifications. In May, DET's Finance Director prepared a draftpublic bid announcement, one that was never released, limiting bidproposals to buildings within the City of Warwick.

The State issued the official Invitation for Lease Proposal ("ILP") forthe new DET headquarters in June 1988. The ILP specified that qualifyingbuildings needed to be located in the "periphery of the Central BusinessDistrict of the City of Providence." Unlike its status under the draftILP written by DET's Finance Director, under the terms of the officialILP, Laramee's Leesona Building in Warwick was not a qualified proposal.

On November 29, 1988, the Rhode Island Department of Administration,the agency charged with managing state government properties, selectedthe Metcalf Building in Providence as the location for the new DEToffices. The Metcalf Building was owned by Pine Street Realty Trust andPine Street Realty Associates Limited Partnership (collectively, "PineStreet"). of the bidders qualified under the official ILP, Pine Streetwas the lowest bidder for the project. Defendants Joseph DiBattista,Matthew J. Marcello, III ("Marcello"), and Joseph Mollicone, Jr.("Mollicone") were trustees of the Pine Street trust and general partnersof the Pine Street limited partnership. Plaintiffs also allege thatdefendants Rodney M. Brusini ("Brusini"), Edward D. DiPrete ("DiPrete"),Henry W. Fazzano ("Fazzano"), and Edward F. Ricci owned equity interestsin the Pine Street venture at relevant times. Defendant lawfirmHinckley, Allen & Snyder represented Pine Street in its dealings with theState in the DET matter. The firm also represented at various timesLaramee in several of his business ventures.

Plaintiffs allege that Pine Street partners engineered the change inthe ILP specification from Warwick to Providence and obtained the State'saward by bribing DiPrete, then the Governor of the State of RhodeIsland. For the purposes of these Motions, the Court need not rehashplaintiffs' allegations in great detail. The essence of the story,according to the version proposed by plaintiffs, is as follows. In May1988, Mollicone met with the Director of DET, defendant John S. Renza,Jr., and the governor's campaign finance director and Pine Street partnerBrusini, to arrange the fix. In exchange for the selection of the PineStreet proposal, DiPrete would receive $50,000 in cash and a share in thePine Street business. By April 1989 the transaction was largelycomplete: the State had executed a lease for the Metcalf Building andPine Street partners had delivered briles to Brusini, who forwarded thecash to DiPrete.

Laramee, suspicious of the circumstances surrounding the selection ofthe Metcalf Building, launched an aggressive publicity campaignquestioning the award of the state lease. In addition to writing lettersto several newspapers calling into doubt the propriety of the lease,Larameecontacted numerous public officials including representatives of theGovernor's Office, the Rhode Island Department of the Attorney General,the United States Attorney for the District of Rhode Island, and RhodeIsland's Congressional delegation. These pleas for investigation began inlate 1988 and continued into 1989. Typical of Laramee's complaints werehis declarations in September 1988 that there were "irregularities" inthe selection process, a charge made to the Governor's Office. Larameealso charged that the process had been "rigged," a belief he expressed tothe head of the Rhode Island Republican Party and an attorney who was theformer mayor of Warwick and who, Laramee suspected, had political ties toDiPrete.

Laramee contends that he and his business paid a price for his probeinto the validity of the DET lease. According to the Amended Complaint,Laramee was the target of reprisals for his attempt to shed sunlight onthe allegedly corrupt selection process. He argues that defendantsFazzano, Marcello, and Bentley Tobin ("Tobin"), a partner in theHinckley, Allen law firm and a director of Eastland Bank ("Eastland"),caused Eastland, the holder of the Leesona Building's mortgage, tosabotage Laramee's personal and business finances. According toplaintiffs, Fazzano, Marcello, and Tobin used unspecified means to forceEastland to declare the Leesona Building mortgage in default, to exercisean assignment of rents clause in the mortgage agreement, to closeLaramee's personal line of credit, and to coerce Laramee and Lares toexecute under economic duress a forbearance letter restructuring theirdebts with Eastland. Plaintiffs claim that these actions forced Laresinto receivership. All of these actions occurred in 1989 and 1990.

Furthermore, plaintiffs allege that these three defendants, beginningin December 1992, maliciously interfered with the Lares receivership.Plaintiffs contend that these three defendants again used unidentifiedtactics to coerce the court-appointed receiver to deny plaintiffs surplusfunds from the receivership. It is also alleged that Tobin, Fazzano, andMarcello caused Lares to be audited by Eastland and that the three"continued to harass, deal unfairly and damage [Laramee] and Laresbecause he would not stop trying to have various governmental officerslook into and void the Pine Street Lease." Amended Complaint ¶ 58.According to the Amended Complaint, these three defendants also "refusedto permit Eastland Bank to accept a reasonable plan presented by thereceiver" to rescue Lares from financial disaster. Amended Complaint¶ 61. In addition, Tobin is charged with opposing a loan to Larameefrom a third party. The pleading charges that when "Tobin got wind of theproposed loan [he] was able to dissuade this third-party from making" theloan. Amended Complaint ¶ 63.

Plaintiffs assert that defendants' conduct with regard to the DET leaseand the Eastland credit relationship gives rise to causes of action underfederal and state law. Accordingly, they filed this lawsuit on August30, 1995. On December 8, 1997, this Court granted plaintiffs' motion tofile the Amended Complaint now before the Court. The Amended Complaintdetails eleven counts. Count I alleges a cause of action under the civilliability provision of the Rhode Island anti-bribery statute,R.I.Gen.Laws § 11-7-6. Count II alleges a cause of action under thefederal RICO Act, 18 U.S.C. § 1961-68. The remainder of the counts inthe Amended Complaint are based on state common law theories. Count IIIalleges a cause of action for breach of the covenant of good faith andfair dealing. Count IV alleges a cause of action for "Aiding and AbettingHarm to Third Parties." Count V alleges a cause of action for civilconspiracy. Count VI alleges a cause of action for intentionalinterference with contractual relations. Count VII alleges a cause ofaction for breach of fiduciary duty. Count VIII alleges a cause of actionfor "Prima Facie Tort, Commercial Bad Faith and Unlawful EconomicDuress and Common Law Tort." Count IX alleges a cause of action forintentional infliction of emotional distress. Count X alleges a cause ofaction for loss of consortium suffered by plaintiff Sharon Laramee. CountXI alleges a cause of action for loss of consortium suffered by plaintiffJohn Laramee. Plaintiffs argue that all defendants are jointly andseverally liable under each of the counts.

The parties have engaged in extensive discovery for several years,including the taking of numerous depositions and the production of manydocuments. Now several defendants move for summary judgment on a numberof grounds.2 Most importantly, defendants target plaintiffs' RICOclaim. Procedurally, defendants contend that the RICO claim is timebarredby the statute of limitations applicable to the civil racketeeringstatute. Substantively, defendants contend that plaintiffs have failed toproduce sufficient competent evidence to establish each of the necessaryelements of a RICO cause of action. Finally, defendants argue that thisCourt should decline to exercise supplemental jurisdiction overplaintiffs' state law claims if the Court finds the RICO count deficient.


I. Standard of Review

Rule 56(c) of the Federal Rules of Civil Procedure sets forth thestandard for ruling on summary judgment motions:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Fed.R.Civ.P. 56(c). The critical inquiry is whether a genuine issue ofmaterial fact exists. "Material facts are those `that might affect theoutcome of the suit under the governing law.'" Morrissey v. Boston FiveCents Sav. Bank, 54 F.3d 27, 31 (1st Cir. 1995) (quoting Anderson v.Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986)). "A dispute as to a material fact is genuine `if the evidence issuch that a reasonable jury could return a verdict for the nonmovingparty.'" Id. (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505).

On a motion for summary judgment, the Court must view all evidence andrelated reasonable inferences in the light most favorable to thenonmoving party. See Springfield Terminal Ry. Co. v. Canadian Pac. Ltd.,133 F.3d 103, 106 (1st Cir. 1997). "[W]hen the facts support plausiblebut conflicting inferences on a pivotal issue in the case, the judge maynot choose between those inferences at the summary judgment stage." Coynev. Taber Partners 1, 53 F.3d 454, 460 (1st Cir. 1995). Similarly,"[s]ummary judgment is not appropriate merely because the facts offeredby the moving party seem more plausible, or because the opponent isunlikely to prevail at trial." Gannon v. Narragansett Etec. Co.,777 F. Supp. 167, 169 (D.R.I. 1991).

II. Subject Matter Jurisdiction

Subject matter jurisdiction in this case rests on the federal questiondoctrine. This Court may exercise jurisdiction over plaintiffs' RICOclaim under 18 U.S.C. § 1964. The state law causes of action arepiggybacked onto the RICO claim based on this Court's supplementaljurisdiction under 28 U.S.C. § 1367. This is the only theory offederal jurisdiction available to plaintiffs. Diversity jurisdictionunder 28 U.S.C. § 1332 cannot be invoked here because there is a lackof complete diversityamong the parties. See Carden v. Arkoma Assocs., 494 U.S. 185, 187, 110S.Ct. 1015, 108 L.Ed.2d 157 (1990) (following the complete diversity rulefirst enunciated by the Supreme Court in Strawbridge v. Curtiss, 7 U.S.(3 Cranch) 267, 267, 2 L.Ed. 435 (1806)); Toste Farm Corp. v. Hadbury,Inc., 70 F.3d 640, 642 (1st Cir. 1995) (same). Plaintiffs cannot satisfythe complete diversity requirement of § 1332 because one of thepartners in Lares, Donald Wignall, is a Rhode Island resident and severalof the defendants are also Rhode Island residents. See Carden, 494 195-96, 110 S.Ct. 1015 (holding that for the purposes of determiningdiversity jurisdiction, courts must consider the residency of everypartner in an unincorporated association). Determining the sufficiency ofthe sole federal claim, therefore, is of primary importance because thebasis of this Court's jurisdiction hangs in the balance.

III. The RICO Count

A. Elements of the cause of action

Federal law provides for both criminal penalties and civil remediesagainst individuals who participate in racketeering. The civil cause ofaction for victims of racketeering allows that:

[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.

18 U.S.C. § 1964 (c). In addition to establishing a violation of§ 1962, a RICO plaintiff must prove both factual and proximatecausation between the racketeering and a legally-cognizable injury. SeeHolmes v. Securities Investor Protection Corp., 503 U.S. 258, 268, 112S.Ct. 1311, 117 L.Ed.2d 532 (1992); Pujol v. Shearson/American Express,Inc., 829 F.2d 1201, 1205 (1st Cir. 1987).

A violation of § 1962 consists of four essential elements: "(1)conduct (2) of an enterprise (3) through a pattern (4) of racketeeringactivity." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct.3275, 87 L.Ed.2d 346 (1985) (footnote omitted); see18 U.S.C. § 1961-62. The RICO statute provides that an "enterprise"may consist of "any individual, partnership, corporation, association, orother legal entity, and any union or group of individuals associated infact although not a legal entity." 18 U.S.C. § 1961 (4). Theenterprise must form an entity "separate and apart" from the pattern ofracketeering activity with which it is charged. Libertad v. Welck,53 F.3d 428, 441-42 & n. 10 (1st Cir. 1995). A pattern of racketeeringactivity "requires at least two acts of racketeering activity, . . . thelast of which occurred within ten years (excluding any period ofimprisonment) after the commission of a prior act of racketeeringactivity." 18 U.S.C. § 1961 (5). The crimes that qualify asracketeering activity are enumerated in § 1961 and include among manyothers, the crimes of bribery, extortion, and mail fraud, all of whichare alleged in the Amended Complaint. See id. § 1961(1).

Plaintiffs contend that these criminal acts were conducted by theindividual defendants as an enterprise with the goals of preventing Laresfrom winning the DET lease and, later, silencing Laramee in his attemptto expose the alleged corruption. According to this theory, these acts ofracketeering activity damaged plaintiffs' business by denying them theincome of the DET lease and damaging their relationships with creditors.

B. The statute of limitations defect

The RICO claim must fail because it is barred by the statute oflimitations. The United States Supreme Court has ruled that a four-yearstatute of limitations applies to civil RICO claims. See Agency HoldingCorp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 156, 107 S.Ct.2759, 97 L.Ed.2d 121 (1987); Rodriguez v. Banco Central, 917 F.2d 664,665 (1st Cir. 1990). Left undefined by the Supreme Court, however, wasthe matter of accrual.3 Plaintiffs attempt to exploit the split amongthe circuits on this issue. At least four federal courts of appeals haveheld that a RICO claim accrues and, therefore, the statute of limitationson that claim begins to run when the plaintiff has discovered, or shouldhave discovered, both an injury to himself and the pattern ofracketeering activity that caused the injury. See Granite Falls Bank v.Henrikson, 924 F.2d 150, 154 (8th Cir. 1991); Bath v. Bushkin, Gaims,Gaines & Jonas, 913 F.2d 817, 820 (10th Cir. 1990), rev'd on othergrounds, Lampf Pleva, Lipkind, Prupis & Petigrow v. Gilbertson,501 U.S. 350, 354, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991); Bivens GardensOffice Bldg., Inc. v. Barnett Bank, 906 F.2d 1546, 1554-55 (11th Cir.1990); Keystone Ins. Co. v. Houghton, 863 F.2d 1125, 1130 (ad Cir.1988).

The United States Court of Appeals for the First Circuit has adopted adifferent rule. Despite plaintiffs' attempt to finesse the import of theFirst Circuit's decision, it is clear that in this circuit, the majorityrule applies. Under the "injury discovery" rule adopted by the FirstCircuit, the statute of limitations on a civil RICO claim begins to run"when a plaintiff knew or should have known of his injury." BancoCentral, 917 F.2d at 666. In this circuit, the meter begins to tick whenthe plaintiff discovers the injury, even if the plaintiff is unaware ofthe precise acts of racketeering that caused the injury. See Hodas v.Sherburne, Powers & Needham, 938 F. Supp. 60, 63 (D.Mass. 1996)(explaining that plaintiffs "plea that he did not know of the `conduct'that caused his injury is clearly insufficient to alter the accrual dateof his claim"). This formulation of the rule is in the majority among theother federal courts of appeals that have addressed the issue. SeeRotella v. Wood, 147 F.3d 438, 440 (5th Cir. 1998), cert. granted,___ U.S. ___, 119 S.Ct. 1139, 143 L.Ed.2d 207 (1999); Detrick v.Panalpina, Inc., 108 F.3d 529, 537 (4th Cir. 1997); McCool v. Strata OilCo., 972 F.2d 1452, 1464 (7th Cir. 1992); Bankers Trust Co. v. Rhoades,859 F.2d 1096, 1102 (2d Cir. 1988); Beneficial Standard Life Ins. Co. v.Madariaga, 851 F.2d 271, 274-75 (9th Cir. 1988). Under the Bankers Trustaccrual rule, expressly adopted by the First Circuit in Banco Central,"each time plaintiff discovers or should have discovered an injury causedby defendant's violation of § 1962, a new cause of action arises asto that injury." Bankers Trust Co., 859 F.2d at 1105; see Banco Central,917 F.2d at 666-68 (adopting the Bankers Trust accrual rules for civilRICO claims). Accordingly, this Court must evaluate each of plaintiffs'two claimed injuries separately under the RICO statute of limitationsstandard.

Plaintiffs filed this lawsuit on August 30, 1995. Any injury thatplaintiffs were aware of, or should have been aware of, before August 30,1991 may not constitute a basis for the present civil RICO cause ofaction. Even when viewing the evidence in the light most favorable toplaintiffs, the proposed cause of action cannot survive this scrutiny.Although plaintiffs do not clearly enumerate the injuries that underlietheir RICO claim, the Court has sifted through the Amended Complaint, nomodel of perspicuity, and identified two injuries alleged by plaintiffsto have been caused by the actions of defendants.

First, plaintiffs contend that they were damaged by the award of theDET lease to the owners of the Metcalf Building. This injury is easyenough to understand — plaintiffs claim that they lost potentialrents due to the alleged scheming of defendants. Second, they allegethatthey were harmed by the forced receivership of bares. Followingplaintiffs' line of reasoning, the corrupt machinations of defendants intheir conspiracy to torpedo Laramee's business forced Laramee's hand anddrove him to file for Lares' receivership. The Amended Complaintdescribes two tactics used by the members of the alleged conspiracy tosilence plaintiffs. First, defendants interfered with Eastland's creditrelationships with both Laramee and Lares, somehow forcing the bank totighten its grip on the debts owed by Laramee and Lares, and eventuallychoking-off all funds. Second, plaintiffs accuse defendants of meddlingwith the receivership itself. They charge defendants with preventing thereceiver from disbursing surplus funds, forcing an audit of theirbusiness, and preventing plaintiffs from securing credit from alternativesources.

Nevertheless, there can be no doubt that the injury allegedly sufferedby plaintiffs as a result of the State's award of the DET lease occurredbefore August 30, 1991. Plaintiffs were well aware in 1989 that theLeesona Building would not be selected by the State for the new DEToffices. For the purposes of the statutory bar, nothing more need besaid. The second injury allegedly suffered by plaintiffs, the forcedreceivership of Lares, is also barred because plaintiffs filed for thereceivership of Lares in January 1990 due to the "wrongful actions" ofdefendants, according to the Amended Complaint. Consequently, any RICOclaim predicated on this alleged injury is also barred.

C. The fraudulent concealment claim

Yet plaintiffs are unwilling to concede defeat so readily. In afruitless attempt to stave off application of the civil racketeeringstatute of limitations, plaintiffs seek the shelter of the fraudulentconcealment doctrine. The First Circuit has recognized that the civilRICO statute of limitations may be tolled by a defendant's acts offraudulently concealing the nature of his wrongdoing. See Banco Central,917 F.2d at 667-68. Plaintiffs must establish three elements to invokethe fraudulent concealment defense with success: (1) wrongful concealmentof their actions by the defendants (2) which prevented plaintiffs'discovery of their cause of action within the statutory period and (3)due diligence on the part of plaintiffs in attempting to ferret out theclaim. See Berkson v. Del Monte Corp., 743 F.2d 53, 55 (1st Cir. 1984);Hodas, 938 F. Supp. at 63; see also Klehr v. A.O. Smith Corp.,521 U.S. 179, 194, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997).

Plaintiffs bear the burden of demonstrating that defendants concealed"the facts that might lead one to suspect anything." Hodas, 938 F. 63; see also Pocahontas Supreme Coal Co. v. Bethlehem Steel Corp.,828 F.2d 211, 218-19 (4th Cir. 1987). Such concealment must be the resultof affirmative efforts by defendants to prevent plaintiffs fromdiscovering the wrongdoing. See Grimmett v. Brown, 75 F.3d 506, 514-15(9th Cir. 1996). Furthermore, resort to this equitable doctrine isinappropriate merely because a plaintiff did not know each and everydetail of his cause of action within the statutory period.

Based on the evidence in the record, this Court concludes thatplaintiffs had enough knowledge of the wrongful acts of defendants duringthe statutory period to preclude application of the fraudulentconcealment doctrine at this stage of the proceedings. In addition tocontacting numerous governmental agencies and local newspapers as farback as 1989 to demand investigation of the DET lease, Laramee frequentlydiscussed the circumstances surrounding the award of the lease to PineStreet well before expiration of the statute of limitations. Thesubstance of these discussions, acknowledged by Laramee in his sworndeposition, closely resembles the essence of the charges in the AmendedComplaint.

In November 1988, before the ILP was officially awarded, Laramee metwith two people he believed could provide him with access "to thegovernor, John Holmes, the head of the Rhode Island Republican Party andJames Taft, the former mayor of the City of Cranston. Laramee sought thispolitical access because he believed that defendants were engaged inwrongdoing and that the improper conduct was being directed by powerfulpolitical forces within state government. At Laramee's deposition, thefollowing exchange took place regarding that 1988 meeting:

Question: And that meeting was for approximately two and a half hours with Jim Taft, correct?

Answer: Yes.

Question: And at that meeting you said that you did not believe that things were correct with respect to the granting of this lease?

Answer: Correct.

Question: That you felt that it was rigged?

Answer: That's what I was told by two people in state government.

Question: And at that time you knew about Joe Mollicone, correct?

Answer: Yes. Laramee Deposition, vol. III, at 149-50: While Larameemay not have used the words bribery and extortion, theclear import of his use of the word "rigged" is that theaward of the lease was controlled by improperconsiderations and illegal influences. At an earlierdeposition, Laramee admits that he knew that "the dealwas orchestrated" for the benefit of Pine Street.Laramee Deposition, vol. I, at 85. That suchorchestration was overseen by the Governor's Office wasapparent to Laramee, given his deposition statement thatthe change of the ILP's geographic specification wasordered by the Governor's Office.

Much of the substance of plaintiffs' RICO cause ofaction was described in open court by an attorney whorepresented Laramee in a receivership action filed instate court in 1990. At a hearing in Rhode IslandSuperior Court in March 1991, Laramee's attorneyexplained that the Lares receivership was compelled bythe award of the DET lease to Pine Street. The attorneyblamed the loss on several parties who are nowdefendants in the present action and who helped PineStreet secure the lease, including Tobin and Mollicone.The lease was not awarded to Lares, according toLaramee's attorney, because of the "tortiousinterference" of defendants. The lawyer concluded byreferring to "this Bank's complicity, and these lawfirms' involvement in this mess." Laramee Deposition,vol. I, at 86-88.

This evidence, along with similar examples within thevoluminous record, scuttles plaintiffs' attempt torescue their RICO cause of action by deploying afraudulent concealment claim. The effort founders on theample evidence of plaintiffs' "knowledge" of the allegedwrongdoing as early as 1988. For the purposes ofdetermining the merit of plaintiffs' equitable attack onthe statute of limitations, it is significant that muchof the meat of the Amended Complaint can be traced backto statements made by Laramee well before August 30,1991. For this reason, plaintiffs cannot establish alack of knowledge of defendants' alleged wrongdoing,leaving the statute of limitations free to work itsprohibition on the RICO count.4

D. Substantive defects in the RICO count

The effort to ground a RICO cause of action on thesecond injury alleged by plaintiffs, the forcedreceivership of Lares, suffers from further substantiveills. In essence, there is no basis in federal law forconstructing a civil RICO cause of action on several ofthe deeds attributed to defendants in the AmendedComplaint. None of the acts alleged by plaintiffs, apartfrom those involving bribery, extortion, and mail fraudsurrounding the award of the DET lease, constitutepredicate acts of racketeering activity under18 U.S.C. § 1961 (1). In the morass of the AmendedComplaint, it is unclear exactly what predicate acts ofracketeering plaintiffs mean to allege. What is clear isthat several of the activities that plaintiffs label aspredicate acts surely do not make the cut. Even a cursoryexamination of the RICO statute is sufficient to informa diligent plaintiff that "conducting a continuingfinancial crimes enterprise in violation of18 U.S.C. § 225," "making false statements on aBank's records, in violation of 18 U.S.C. § 1001,"and "anti-tying violations of the Federal Bank HoldingCompany Act, 12 U.S.C. § 1972 (1)(c)" do not meetthe definition of "racketeering activity" given byfederal law. See 18 U.S.C. § 1961 (1).

The only predicate crimes alleged by plaintiffs thatsatisfy the statutory definition of racketeeringactivity are bribery, extortion, and mail fraud.5See id. While these crimes can be linked to specificalleged actions of several defendants in securing theDET lease, it is unclear how these crimes relate toplaintiffs' banking travails. Plaintiffs fail to explainhow any of the alleged conduct of Tobin, Fazzano, andMarcello with regard to Eastland and the Laresreceivership constitutes any one of these crimes. ThisCourt is also unable to identify any relationshipbetween the vague allegations and the definitions of therelevant crimes.

Plaintiffs are most clearly off the mark when theycharacterize as racketeering activity the allegedinterference by several defendants into the decisions ofboth the receiver and Eastland officials. The AmendedComplaint alleges that defendants "refused to permitEastland Bank to accept a reasonable plan presented bythe receiver which was most unusual." Amended Complaint¶ 61. On the face of this allegation, no bribery,extortion, or mail fraud is alleged, nor have plaintiffsadduced any competent evidence that might transform thischarge into the necessary predicate act ofracketeering. The Amended Complaint overflows withsimilarly deficient claims. The pleading asserts thatdefendants "wrongfully refused to allow or permit thereceiver to make any distributions of surplus funds to[Laramee]," Amended Complaint ¶ 60, that defendants"caused Lares to be audited" by Eastland, AmendedComplaint ¶ 61, that defendants "continued toharass, deal unfairly and damage" plaintiffs, AmendedComplaint ¶ 58, and that Tobin "was able todissuade" a third party from loaning Laramee money,Amended Complaint ¶ 63. By characterizing these actsas "wrongful," plaintiffs do not transform them intoracketeering activity. Merely tortious conduct is aninsufficient basis for a civil racketeering remedy;plaintiffs must demonstrate that defendants' actionsconstitute predicate acts of racketeering as defined by18 U.S.C. § 1961 (1). No injury cognizable under thecivil RICO statute arises from this alleged conduct.

Likewise, the charges underlying plaintiffs' claim offorced receivership do not rise to the level ofracketeering activity. Two separate acts are alleged tohave contributed to plaintiffs' decision to file for thereceivership of Lares. Plaintiffs describe the first inthe following way: "pursuant to Tobin and Fazzano'srequest on or about June 23, 1989 at a time when theLares mortgage payment was less than twenty-five (25)days late, a bank officer wrongfully claimed that[Laramee] was in default [and] a bank officer notifiedand seized the rents from the Leesona Building tenants."Amended Complaint ¶ 43. The second precipitatingevent, according to the Amended Complaint, wasEastland's decision to apply the proceeds of a secondmortgage it granted on Laramee's residence to theoutstanding balance on Laramee's personal line ofcredit. Again, plaintiffs claim that Eastland's conductwas part of defendants' conspiracy. They argue that thedecision to use the mortgage proceeds to pay downLaramee's line of credit, instead of using the proceedsto rescue Lares, was made "because of Tobin andFazzano's plan." Amended Complaint ¶ 51. None of theconduct that allegedly forced the receivership meets thestatutory definition of racketeering activity found at18 U.S.C. § 1961 (1). Plaintiffs fail entirely toexplain how the amorphous influences and plans ofTobin, Fazzano, and Marcello amount to bribery,extortion, or mail fraud.

Looking beyond the pleadings, even the evidenceadduced by plaintiffs lends little support to theircause. Nothing in the record, even when viewed in thelight most favorable to plaintiffs, provides support forthe conclusion that any of the alleged conduct ofdefendants amounts to bribery, extortion, or mailfraud. In fact, plaintiffs' evidence fails even toprovide a factual basis for the charges in the AmendedComplaint.

Illustrative of the deficient nature of plaintiffs'RICO claim is the paucity of evidence linking defendantsto actions of Eastland credit officials who actuallymade decisions that impacted Laramee and Lares. Noreasonable jury could conclude, based on the evidence inthe record, that any of the defendants caused either thereceiver of Lares or officials of Eastland to takeretahatory actions against plaintiffs to silence or harmthem. Amazingly, in his sworn deposition testimonyLaramee concedes this total lack of an evidentiarybasis. The following exchange between defense counseland Laramee is typical of the "evidence" adduced byplaintiffs with regard to the alleged harms suffered byplaintiffs as a result of Lares' forced receivership:

Question: Do you have any facts to support your allegation that Bentley Tobin and/or Matt Marcello directed Eastland Bank to oppose the distribution of monies to you in the receivership?

Answer: That's my feeling.

Question: Do you have any facts?

Answer: No.

Question: Not your feelings.

Answer: No.

Laramee Deposition, vol. III, at 115.

In another exchange during this deposition, Laramee is questioned aboutthe basis for his claim that Tobin and Fazzano pressured Eastland tosever its credit relationship with plaintiffs. When asked directlywhether he was ever told by anyone that Tobin and Fazzano had forced thebank to send the 1989 mortgage default letter, Laramee responds in thenegative. The basis for his allegation, according to his own testimony,was his `belief' that the conspiracy must be so. Laramee's testimony isreplete with similar declarations of his personal "belief," yet theevidence is devoid of facts that might lead Laramee to form a reasonableinference that the specific charges in the Amended Complaint areaccurate. "`Mere allegations, or conjecture unsupported in the record,are insufficient to raise a genuine issue of material fact.'" Horta v.Sullivan, 4 F.3d 2, 8 (1st Cir. 1993) (quoting August v. OfficesUnlimited, Inc., 981 F.2d 576, 580 (1st Cir. 1992)). Plaintiffs fail tosatisfy even the low evidentiary bar set by the "mere scintilla" standardfor measuring the sufficiency of the plaintiffs' evidence on a motion forsummary judgment. See Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ("Themere existence of a scintilla of evidence in support of the plaintiffsposition will be insufficient; there must be evidence on which the jurycould reasonably find for the plaintiff.").

In summary, plaintiffs' alleged injury based on the loss of the DETlease is barred by the statute of limitations applicable to civil RICOactions. The injury based on the forced receivership is an inadequatebasis for a RICO charge for either of the two reasons discussed —the statute of limitations bar or the failure to establish predicate actsof racketeering activity. Accordingly, plaintiffs' RICO cause of actionfails as a matter of law. Unable to establish that they have been"injured in [their] business or property" in a way that would entitlethem to civil remedies, plaintiffs' resort to the federalanti-racketeering statute is unavailing.

IV. The State Law Counts

This Court declines to exercise jurisdiction over the remaining statelaw counts in the Amended Complaint. Because plaintiffs cannot establishdiversity jurisdiction, this Court could consider their state law claimsonly under the supplemental jurisdiction doctrine. The relevant statutestates that "in any civil action of which the district courts haveoriginal jurisdiction, the district courts shall have supplementaljurisdiction over all other claims that are so related to claims in theaction . . . that they form part of the same case or controversy."28 U.S.C. § 1367 (a). This Court has power to hear both state andfederal claims if they all would ordinarily be expected to be tried inone judicial proceeding. See Penobscot Indian Nation v. Key Bank ofMaine, 112 F.3d 538, 563-64 (1st Cir. 1997); Coastal Fuels of PuertoRico, Inc. v. Caribbean Petroleum Corp., 79 F.3d 182, 190 (1st Cir.1996). In particular, "[t]he state and federal claims must derive from acommon nucleus of operative fact." United Mine Workers v. Gibbs,383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). However, theexercise of supplemental jurisdiction is discretionary. See Penobscot,112 F.3d at 564; Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249,256-57 (1st Cir. 1996). In exercising this discretion, the district courtshould "take into account concerns of comity, judicial economy,convenience, fairness, and the like." Roche, 81 F.3d at 257.

The statute granting the district courts supplemental jurisdictionexplicitly states that this Court may decline to exercise its discretionif it has dismissed all claims over which it has original jurisdiction.See 28 U.S.C. § 1367 (c)(3); Penobscot, 112 F.3d at 564. In the casesub judice, no federal claims remain, leaving only a raft of state commonlaw and statutory causes of action. This Court, mindful of the concernsof federalism and wary of wasting federal judicial resources, declinesthis opportunity to interpret state law in a matter devoid of any federalinterest. The United States Supreme Court has counseled as much. TheCourt has explained that when all federal law claims are eliminated fromthe case before trial, in the usual case the balance of factors to beconsidered should lead the court to conclude that the "stateclaims should be dismissed as well." Gibbs, 383 U.S. at 726, 86 S.Ct.1130; see Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7, 108S.Ct. 614, 98 L.Ed.2d 720 (1988). Therefore, the state law claims aredismissed for lack of subject matter jurisdiction.


For the forgoing reasons, defendants' Motions for Summary Judgment onCount II are granted. Judgment as to Count II will be entered in favor ofall defendants. Although. two defendants did not move for summaryjudgment, it is clear that those defendants (DiPrete and Mollicone) arealso entitled to summary judgment for the reasons explained in thisdecision. The Court declines to exercise supplemental jurisdiction on theremainder of the counts in the Amended Complaint. Therefore, Count I andCounts III through XI are dismissed without prejudice for lack of subjectmatter jurisdiction.

It is so ordered.

1. Although the department was named the Department of EmploymentSecurity when these events began, the agency was subsequently renamed theDepartment of Employment and Training. For the sake of clarity, the Courtwill use the name "DET" exclusively.

2. The Motions for Summary Judgment were filed by defendants RodneyM. Brusini, Joseph DiBattista, Henry W. Fazzano, Hinckley, Allen &Snyder, Matthew J. Marcello, III, Michael B. Nulman, John S. Renza, Sr.,Edward F. Ricci, and Bentley Tobin. Defendants Edward D. DiPrete andJoseph Mollicone, Jr. did not file motions.

3. The Court notes that the United States Supreme Court is likely torule on this very issue this term in the appeal of Rotella v. Wood,147 F.3d 438 (5th Cir. 1998), cert. granted, ___ U.S. ___,119 S.Ct. 1139, 143 L.Ed.2d207 (1999).

4. Although it is unnecessary for the disposition of the Motions atissue, the Court is compelled to note that plaintiffs' allegations offraudulent concealment are woefully inadequate under the pleadingstandards of Rule 9(b) of the Federal Rules of Civil Procedure. The ruleprovides that "[i]n all averments of fraud or mistake, the circumstancesconstituting fraud or mistake shall be stated with particularity."Fed.R.Civ.P. 9(b). The rule is applicable to civil RICO cases. See Doylev. Hasbro, Inch, 103 F.3d 186, 194 (1st Cir. 1996). Specifically,plaintiffs alleging fraudulent concealment as a basis for tolling thestatute of limitations on a civil RICO action are obligated to satisfythe rule. See Butala v. Agashiwala, 916 F. Supp. 314, 319 (S.D.N Y1996). A well-pleaded allegation of fraud should include "specificationof the time, place, and content of an alleged false representation."McGinty v. Beranger Volkswagen, inc., 633 F.2d 226, 228 (1st Cir. 1980).Conclusory allegations of schemes and conspiracies of silence areinadequate. See Doyle, 103 F.3d at 194. Although the Amended Complaintexplains in detail how plaintiffs believe they were harmed, it is bereftof specific examples of how plaintiffs were misled in their attempts touncover the truth and what roadblocks defendants erected to preventplaintiffs from following their path. Furthermore, plaintiffs fail tospecify which defendants committed acts of concealment and when they werecommitted. However, given the substantive madequacies of plaintiffs'fraudulent concealment claim, this pleading defect need not be relied onby the Court in disposing of this matter.

5. Again, the Court is moved to note the failure of plaintiffs toproperly plead fraud in the Amended Complaint. Although they allege actsof mail fraud, plaintiffs provide no details whatsoever describing whichof the defendants used the mails to commit a fraud or when, how, where,and to what end the mails were used. Plaintiffs' conclusory pleadings arewholly inadequate under Rule 9(b).

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