Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

CAPASSO v. CIGNA INS. CO.

June 10, 1991

NANCY R. CAPASSO, PLAINTIFF,
v.
CIGNA INSURANCE COMPANY (F/K/A AETNA INSURANCE COMPANY), CIGNA FIRE UNDERWRITERS INSURANCE COMPANY (F/K/A AETNA FIRE UNDERWRITERS INSURANCE COMPANY, EUROPEAN AMERICAN BANK, CARL A. CAPASSO, NANCO CONTRACTING CORP., NANCO EQUIPMENT CORP. N/K/A UNDERGROUND EQUIPMENT, LTD., NANCO CONCRETE CORP. N/K/A REVIEW SUPPLIES, INC., CAPASSO CONTRACTING CORP., BIG CITY CONTRACTING CORP., HHM ASSOCIATES, INC., CORROON & BLACK/CONTRACTORS PLANNING GROUP, INC., (F/K/A CONTRACTORS PLANNING GROUP, INC.), RICHARD FERRUCCI, FRANK MCCRANIE, THOMAS BEAN, NEIL DONOVAN, JOHN K. LEVENSON, PHILIP LIMANNI, "JOHN AND JANE DOES 1-10" AND "XYZ CORPORATIONS", DEFENDANTS.



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

Carl and Nancy Capasso were married in 1971 and divorced in 1985. During the time of their marriage, the couple accumulated substantial wealth through the operation of Nanco Construction Corp. ("NCC"), a contracting company owned by Carl Capasso which was the primary sewer contractor for the City of New York.

Nancy Capasso alleges that Carl Capasso formed new corporations for the purpose of diverting assets away from NCC and thereby placing them outside the reach of Nancy Capasso in the divorce action. She claims that CIGNA, EAB and the other defendants conspired with Carl Capasso to conceal vital information from her with regard to the financial condition of NCC and, when NCC became insolvent, to saddle her with its enormous debts while allowing Carl Capasso to retain his share of the marital assets. She asserts that as a result of the actions of the defendants, her award in the divorce case was less than it should have been and the defendants prevented her from collecting even that by encumbering Carl Capasso's assets with judgments and liens in favor of CIGNA and EAB. She alleges that the actions taken by the defendants constitute a violation of RICO, as well as common law fraud and prima facie tort. The defendants move to dismiss for failure to state a claim on which relief can be granted and failure to plead fraud with particularity. For the reasons explained below, the motions are granted.

As predicate acts for her RICO claim, Nancy Capasso alleges that each of the defendants committed at least two offenses of mail or wire fraud. The defendants challenge her fraud claims on two grounds: 1) the claims are based almost entirely on nondisclosures of information which the defendants had no duty to disclose; and 2) the actions alleged did not damage her property.

A. No Duty to Disclose

With the exception of certain allegations of perjury,*fn1 all of Mrs. Capasso's fraud claims concern failures to disclose, rather than affirmative misrepresentations. A nondisclosure is fraudulent only if there was a duty to disclose the information withheld. United States v. Chestman, 903 F.2d 75, 79 (2d Cir. 1990); Morin v. Trupin, 711 F. Supp. 97, 103 (S.D.N.Y. 1989). More particularly, a duty to disclose arises only where the parties have a fiduciary relationship and one party possesses superior knowledge, not readily available to the other, and knows that the other is acting on the basis of mistaken knowledge. Chestman, 903 F.2d at 79; Morin, 711 F. Supp. at 103.

The defendants argue that in view of the adversarial posture of Carl and Nancy Capasso toward one another during the period in question, there could not have been a fiduciary obligation between them and none has been alleged. Indeed, Nancy Capasso concedes that Carl did not have a fiduciary duty toward her. She claims, however, that he had a legal obligation to disclose material information to her insofar as he had an obligation not to lie under oath in deposition or at trial. She also asserts that the compulsory disclosure provisions of the New York Domestic Relations Law (N.Y.D.R.L. § 236(B)(4)) impose a duty that may substitute for fiduciary duty.

The defendants argue that an externally imposed duty of disclosure, such as the obligation not to lie under oath or the compulsory disclosure provisions of the statutory divorce scheme, cannot support a fraud claim, because such duties are imposed in precisely those situations where the personal obligation to protect the other person's interests is absent. They argue that apart from these externally imposed obligations, a litigant has no right to expect her opponent to disclose facts helpful to her case, and therefore cannot claim to be defrauded when the other party remains silent.

The defendants' arguments are persuasive. While Carl Capasso's alleged failure to answer truthfully at trial and deposition and his alleged failure to fulfill his disclosure obligations under the Domestic Relations Law might subject him to liability for perjury or obstruction of justice, in the absence of a fiduciary duty, a breach of statutory duty to disclose information does not constitute fraud. In United States v. Gallant, 570 F. Supp. 303 (S.D.N.Y. 1983) the court held that the defendant's alleged failure to comply with his duty under copyright law to disclose certain information was insufficient to subject him to prosecution under the mail and wire fraud statutes. In so holding, the court distinguished between a breach of a statutory duty and the breach of a fiduciary duty:

  A statutory disclosure duty, as opposed to a
  fiduciary duty, does not protect a relationship
  that is based on trust. . . . Here the disclosure
  duty, which the government urges as a basis for a
  fraud, is not explicit and is not separate from
  the duty not to infringe copyrights. . . . In
  order to successfully maintain a mail fraud
  prosecution under the Second Circuit rule, in the
  absence of proof of affirmative misrepresentation,
  the government must prove that the defendant
  breached a duty to disclose separate from the
  commission of an otherwise criminal act.

Gallant, 570 F. Supp. at 308-09.

Similarly, in order to allege a valid fraud claim, Nancy Capasso must prove that the defendants breached a duty to disclose separate from the violation of a statutory duty.

There was no fiduciary duty here. During the divorce proceedings, Nancy Capasso demonstrated her distrust of Carl Capasso by thoroughly investigating his claims with regard to the value of his properties, offering expert testimony to dispute his claims, and asking the court to hold him in contempt for violating an order prohibiting him from dissipating the marital assets. None of this behavior is consistent with the trust and confidence that are the prerequisites for a fiduciary relationship. Accordingly, Mr. Capasso's failure to disclose the details of his business activities to Mrs. Capasso during and after the divorce proceedings cannot form the basis for a predicate act under RICO.

B. Defendants' Actions Not Calculated to Damage Her Property

Under Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496-97, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985), a "plaintiff only has standing if, and can only recover to the extent that, he has been injured in his busin ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.