Valley of Lakes RICO Case: Complaint | News Articles
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The following is the Memorandum and Order of February 8, 2000 which denied Plaintiffs' Motion for Reconsideration of the Order of September 30, 2000 (except for the scheduling of expert witness reports). The Court, instead, granted Plaintiffs' motion for alternative relief, namely for permission to file an immediate appeal.
IN THE UNITED STATES DISTRICT COURT
LEON R. DONGELEWICZ,et al.,
M E M O R A N D U M
February 8, 2000
On June 17, 1994, plaintiffs, lot owners in a recreational development called the Valley of Lakes, commenced this action with the filing of a complaint pursuant to: the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968 (Count I); the Interstate Lands Sales Full Disclosure Act, 15 U.S.C. 1701 (Count II); 42 U.S.C. 1983 (Count III); the New Jersey Real Estate Full Disclosure Act, N.J.S.A. 45:15-16.47 (Count IV); and the common law of New Jersey for fraud and deceit (Count V). The complaint was filed in the United States District Court for the District of New Jersey and was transferred to this court by Order of Court dated March 15, 1995.
Succinctly stated, plaintiffs allege a long history of mismanagement, broken promises, and fraud on the part of persons in ownership and management positions at Valley of Lakes over the years. Plaintiffs were certified to proceed as a class pursuant to Fed. R. C. P. 23, and default has been entered against defendants Frank M. Cedrone, C.B.G., Ltd., Oneida Water Co., and Valley Utilities Co., Inc. The remaining defendants are First
Eastern Bank, N.A., First Eastern Corp., MLA Management Associates, Inc., Ralph Conte, and Arlene Rainess Conte.
On September 30, 1999, the court issued a memorandum and order addressing a number of motions by the parties. Dongelewicz v. First Eastern Bank, No. 3:CV-95-0457, 1999 WL 1293030 (M.D. Pa. Sept. 30, 1999). Before the court are motions for reconsideration filed by plaintiffs and defendant MLA Management.
In an Order of Court dated October 13, 1999, we placed limitations on the motions for reconsideration. Among those limitations were a 25-page limitation on briefs and compliance with our Local Rule concerning typeface. Apparently considering these limitations overly confining, plaintiffs have filed two briefs (brief in support of the motion and reply brief) of 25 pages, using a proportional font plainly intended to squeeze as much typeface as possible onto a page. Compare Plaintiffs' Motion for Reconsideration (employing an appropriate, Roman-style font) with Plaintiffs' Brief in Support of Motion for Reconsideration (employing the much smaller type).1 This conduct must be viewed in the context of the letter addressed to the court by plaintiffs' counsel, demonstrating dissatisfaction with our prior memorandum.
lWe note, without further comment, the likelihood the font was condensed for these purposes. See Brief of Arlene Conte and Ralph Conte at 6-7.
Simply stated, such behavior will not be tolerated. In the future, any motion, brief, memorandum, etc., prepared by plaintiffs, counsel for filing with the court must be in courier font.
In our prior memorandum, we noted that several courts have held that the "injury plus pattern" rule continues to be the law of the Third Circuit, and applies to determine the date a RICO cause of action accrues. Since issuance of our memorandum, the Third Circuit has so held. Annuli v. Panikkar, No. 98-7449, slip op. at 8-9, 1999 WL 12681.23, at *4 (3d Cir. Dec. 30, 1999). We believe that the opinion in Annuli confirms cur disposition of defendants' motions for decertification. See Memorandum of September 30, 1999, at 3-5, 1999 WL at *1-*2. We find it unnecessary to address further plaintiffs' misplaced arguments that the "separate accrual rule" applies.
In their brief, as in past briefs, plaintiffs recite conduct which is alleged in the complaint. We disregard allegations for purposes of summary judgment, the stage at which actual evidence must be produced.
The brief in opposition to plaintiffs' motion for reconsideration filed by First Eastern is a thorough and accurate refutation of plaintiffs' arguments. Since it would be a monumental task to address all of Plaintiffs' arguments, any issue not specifically addressed herein is resolved consistent with First Eastern's brief.
"The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Harsco v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985) (citations omitted), cert. denied, 476 U.S. 1171, (1986). "Therefore, a court may properly grant a party's motion for reconsideration in any of the following circumstances: '(1) the development of an intervening change in the law, (2) the emergence of new evidence not previously available, or (3) the need to correct a clear error of law or prevent a manifest injustice.'" In re TMI Litigation Cases Consolidated II, 922 F. Supp. 997, 1008 (M.D. Pa. 1996)(Rambo, C.J.; quoting Cohen v. Austin, 869 F. Supp. 320, 321 (E.D. Pa. 1994); citations omitted in In re TMI). The granting of a motion to reconsider is an extraordinary remedy and a court should not do so when the motion is merely a re-styling or rehash of issues previously presented. McConccha v. Blue Cross and Blue Shield Mutual of Ohio, 930 F. Supp. 1182, 1184 (N.D. Ohio 1996). A court should consider neither new evidence nor a new legal theory which could have been presented on the original motion, taking into account due diligence. Id. Mere disagreement with the court is a ground for an appeal, not a motion for reconsideration. Id.
III. PLAINTIFFS' MOTION FOR RECONSIDERATION
(A) Summary Judgment in Favor of First Eastern
The initial argument by plaintiffs is that the court erred in granting summary judgment in favor of the First Eastern defendants. The argument generally is a re-hash of the arguments
presented in the original briefs of the parties, and we could deny the motion for reconsideration on that basis alone. We limit our analysis to those points raised for the first time.
Plaintiffs misconstrue our prior memorandum and order before arguing that there was error. They state that we held that Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644 (3d Cir. 1998), controlled on the issue of whether First Eastern conducted the affairs of an enterprise. What we held was that First Eastern's role was analogous to that played by the "secondary defendants" in Rolo. There was, and is, no evidence that First Eastern played a role in "conducting the affairs" of the alleged enterprise other than a contractual, arms-length relationship, the same as that played by the entities described in Rolo. Since First Eastern did not participate directly in the affairs of the enterprise, and cannot (under Rolo) be held civilly liable as an aider and abettor, it cannot be liable. Plaintiffs' argument amounts to nothing more than a contention that the role of an alleged aider and abettor should be viewed as the same as one who actually conducts the affairs of the enterprise, and is simply wrong.
(B) Denial of Leave to Amend & Supplement Complaint
Plaintiffs next complain that the court erred in denying their motion to amend and supplement the complaint with new alleged predicate acts based on the statute of limitations. They contend that the court cannot raise the defense of the statute of limitations sua sponte. The argument is actually rather silly, since the statute of limitations defense had been raised by
defendants and was the subject of motions for summary judgment. It therefore was not raised sua sponte.
Plaintiffs again argue that the statute of limitation does not apply to acts occurring after the filing of the complaint. That principle can be said to be correct, but the same accrual date applies, based on the "injury plus pattern" rule.
(C) Summary Judgment on Common Law Fraud Claim
Plaintiffs argue that reconsideration is warranted on the rant of summary judgment in favor of First Eastern on their common law fraud claim. To do so, they re-characterize the claim as one of bankruptcy fraud and/or liability for the actions of MLA. The injuries allegedly suffered by plaintiffs from the purported fraud based on First Eastern's failure to disclose the precarious financial condition of CBG plainly are time-barred, as plaintiffs were put on notice of such a condition by the filing of CBG's bankruptcy. The alleged "massive fraud upon the bankruptcy court" did not alter the notice of financial troubles. Further, plaintiffs' attempts to place liability for the actions of MLA on First Eastern based on agency simply are not supported by the record; "approval" of an action is not agency.
(D) Summary Judgment in Favor of Ralph Conte on RICO Claim
Of more merit is plaintiffs', motion as it relates to the grant of summary judgment in favor of Ralph Conte with respect to plaintiffs' RICO claim. In an early draft of our earlier memorandum, we reviewed First Eastern's arguments relating to the statute of limitations. Having determined that First Eastern's
conduct was analogous to that of the secondary defendants in Rolo and therefore not actionable, we omitted the analysis from a later (and the final) draft as superfluous. However, in granting summary judgment in favor of Ralph Conte with respect to the RICO claim, we referred to the statute of limitations analysis.
We note initially that we reject plaintiffs' argument that he statute of limitations defense was not at issue, because the defense is plainly at issue at this point.
The question thus becomes whether any claim by a named plaintiff accrued within the limitations period. Plaintiffs point to the fact that Ralph Conte allowed CBG to use his broker's license in 1991 and 1992. What is absent from this recitation is an injury to a named plaintiff from any conduct constituting a predicate act within the limitations period. The statute of limitations is a valid defense to the RICO claim on the part of Ralph Conte, and so the omission of our analysis did not result in error.
(E) Summary Judgment in Favor of Arlene Conte
Plaintiffs argue that the court erred in granting summary judgment in favor of Arlene (Rainess) Conte with respect to the RICO claim. The motion is no more than a re-argument of our prior conclusion that there is insufficient evidence to support a finding that Arlene Conte was associated with an enterprise. There is no more evidence to support such a conclusion at this time, either.
(F) Scheduling Motions as Moot
Plaintiffs argue that the court erred in failing to establish deadlines relating to expert witnesses. In an order issued January 7, 1999, we granted a motion by plaintiffs for an enlargement of time to file expert reports until disposition of the motions for summary judgment and class decertification. Due to the pending motions for reconsideration, those motions are not finally disposed-of, so that re-establishment of the deadlines prior to issuance of this memorandum and order would have been premature.
Finally, plaintiffs argue that it was error to conclude that their motion to compel discovery from MLA was moot. Because of the tortured history of this matter, it is not clear whether the motion is properly pending. However, we note that LR 26.3 of the Local Rules for the Middle District of Pennsylvania requires that a moving party certify that it has conferred with opposing counsel in a good faith effort to resolve discovery disputes without the intervention of the court. The certification appended to plaintiffs' motion indicates only that plaintiffs' counsel "notified the defendants and non-parties of plaintiffs' intention to file this motion for purposes of Local Rules 7.1 and 26.3, on May 21, 1998. I did not receive any concurrence."
Notification of the intention to file a motion to compel is not a conference with opposing counsel in a good faith effort to resolve discovery issues. The certification is nothing more than a certificate of non-concurrence in the motion. Any error in cur prior disposition was harmless, given the lack of a proper certification by counsel
IV. MLA'S MOTION FOR RECONSIDERATION
MLA seeks reconsideration of our earlier memorandum insofar as we denied its motion for summary judgment. We did so because the grounds for summary judgment simply were not set forth. MLA now recites, at greater length (although still lacking the separate statement of material facts required under LR 56.1), its arguments in support of summary judgment. What is missing from the motion is any reason to excuse the failure to recite any of these arguments in the initial motion for summary judgment. Arguments which should have been presented initially but were not presented, are not a proper basis for reconsideration.
V. INTERLOCUTORY APPEAL
Plaintiffs seek leave to pursue an interlocutory appeal if their motion for reconsideration is denied. Since it will be denied, we consider the request for certification of an appeal. See generally 28 U.S.C. 1292(b).
The appeal would entail review of both our decision to decertify the class and subclasses and the entry of summary judgment in favor of First Eastern (as well as any other decision adverse to plaintiffs). To merit interlocutory appeal, a movant must identify (1) a controlling question of law (2) about which there is substantial difference of opinion, the immediate resolution of which by the court of appeals will (3) materially advance the ultimate termination of the litigation. Cardona v. General Motors Corp., 939 F. Supp. 351, 353 (D.N.J. 1996).
The first question is whether the statute of limitations issue is sufficient to warrant decertification of the class and
subclasses. There is substantial ground for difference of opinion, given the weight of plaintiffs' arguments contrary to our ruling.2 Resolution of the question would materially advance the ultimate termination of the litigation by determining whether a trial involving only the 16 named plaintiffs is necessary, or ether a trial involving the entire class of plaintiffs is necessary.
The second question is whether the record supports plaintiffs' claims as to which summary judgment has been granted. Again, given the weight of plaintiffs' arguments contrary to our ruling, there is substantial ground for difference of opinion. As with the decertification question, resolution of the question would materially advance the ultimate termination of the litigation by determining whether a trial will proceed involving only the 16 named plaintiffs. Further, the identity of the defendants for trial purposes (just MLA or MLA with perhaps one or more co-defendants) would be established.
We recognize that interlocutory appeal of issues of class certification (and therefore, we presume, class decertification) must involve special circumstances before certification of the appeal is appropriate. Sullivan v. Pacific Indemnity Co., 566 F.2d 444, 445 (3d Cir. 1977); Link v. Mercedes-Benz of N.A., Inc., 550 F.2d 860, 862-863 (3d Cir.), cert. denied, 431 U.S. 933 (1977). We conclude that the entry of summary judgment against plaintiffs with respect to so many claims, and in favor of First
2This court is firmly of one opinion. That does not mean that another court would not take a different view.
Eastern generally, is sufficient "special circumstances" to warrant interlocutory appeal.
For purposes of Third Circuit Local Appellate Rule 5.1, we will certify the issues, in modified form, recited in plaintiffs' brief in support of their motion for reconsideration.
The motions for
reconsideration will be denied. Plaintiffs' request for leave to take an
interlocutory appeal will be granted, and we will certify the
IN THE UNITED STATES DISTRICT COURT
LEON R. DONGELEWICZ,et al.,
February 8, 2000
For the reasons stated in the accompanying memorandum, IT IS ORDERED THAT:
1. Plaintiffs' motion (record document no. 401) for reconsideration, reargument, or alternative relief is denied.
2. The motion (record document no. 407) by defendant MLA Management Associates, Inc., for reconsideration is denied.
3. All documents prepared and filed by plaintiffs' counsel sha11 employ a courier font of at least 12 points, unmodified, so that the typeface shall be no smaller than ten characters per inch.
4. Plaintiffs' request for leave to pursue an interlocutory appeal is granted.
5. We certify that plaintiffs' appeal from our Memorandum and Order of Court dated September 30, 1999, and from this Order Court and accompanying Memorandum involves controlling questions of law as to which there is a substantial ground for difference of opinion, and an immediate appeal from these orders may materially advance the ultimate termination of this litigation.
6. Proceedings in this court are stayed pending disposition of plaintiffs' interlocutory appeal.
7. We certify the following issues for interlocutory appeal:
(a) Whether the court erred in finding that Rolo was controlling on the issue of whether the First Eastern defendants "conducted the affairs of an enterprise";
(b) Whether the court erred by failing to apply the "operation or management test" with respect to whether the First Eastern defendants "conducted the affairs of an enterprise";
(c) Whether the court erred in not holding that the First Eastern defendants may be liable to RICO violations pursuant to the doctrine of respondeat superior;
(d) Whether the court erred by granting summary judgment in favor of the First Eastern defendants with respect to the RICO conspiracy claim when the record supports a finding of aiding and abetting a RICO violation;
(e) Whether aiding and abetting a RICO Predicate act itself constitutes a predicate act;
(f) Whether the court erred by drawing factual inferences favorable to the moving parties;
(g) Whether the court erred by denying leave to amend and supplement the complaint based on the applicability of the statute of limitations;
(h) Whether the court erred by finding, as a matter of law, that plaintiffs had notice of CEG's financial condition when it filed for bankruptcy;
(i) Whether the court erred in granting summary judgment in favor of Ralph Conte on the RICO claims based on the statute of limitations;
(j) Whether the court erred by finding that there was insufficient evidence of record to support a finding that Arlene Conte was "associated with" a RICO enterprise;
(k) Whether the court erred in decertifying the class and subclasses based on the defense of statute of limitations, which would be unique to each plaintiff;
(1) Whether the court erred in denying plaintiffs' motion to compel discovery.
8. The court will schedule a case management conference after disposition of plaintiffs' appeal, and deadlines relating to expert reports will be established at that time.