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GUZZELLO v. VENTEAU

March 31, 1992

JOHN GUZZELLO, Plaintiff, against JOHN VENTEAU, FIRST AMERICAN TITLE COMPANY OF NEVADA, WILLIAM SMITH, AND KERRIE KISSANE, Defendants.


The opinion of the court was delivered by: ARTHUR D. SPATT

MEMORANDUM DECISION AND ORDER

 SPATT, District Judge.

 On December 17, 1991, the Court notified the attorneys for both parties in this action that the Court was converting the defendant John Venteau's motion to dismiss the complaint, pursuant to Fed. R. Civ. P. 12(b)(6), to a motion for summary judgment pursuant to Rule 56. At that time, the the parties were given an opportunity to submit affidavits and other documentary evidence, with an indication that the Court would specifically be reviewing the issues of res judicata and collateral estoppel in relation to two court actions in the State Court of Clark County, Nevada.

 Before the Court at this time are the documents submitted by counsel for both parties in response to the Court's December 17, 1991 notification. For the reasons that follow, the Court finds that the claims raised here either actually were or could have been raised in the state court in Nevada, and therefore the doctrine of collateral estoppel applies to preclude relitigation of the issues raised here. Therefore the defendant's motion for summary judgment is granted.

 I. BACKGROUND

 The complaint in this action alleges a federal claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO") and pendent state claims of prima facie tort, assault and battery, and intentional interference with a business relationship. Subject matter jurisdiction is based on 28 U.S.C. § 1331, in that the RICO claim "arises under" the laws of the United States.

 By Order dated May 31, 1991, the Court dismissed with prejudice the plaintiff Guzzello's claims against defendants First American Title Company of Nevada, William Smith and Kerrie Kissane, memorializing the Court's oral decision of March 22, 1991, dismissing those claims with prejudice pursuant to Fed. R. Civ. P. 12(b)(2) (lack of in personam jurisdiction), without costs and sanctions.

 The substantive allegations of the complaint in relation to the remaining defendant, John Venteau, concern a 1987 business transaction between the plaintiff Guzzello, defendant Venteau, and a Mr. Calvin V. Thornton, in connection with the purchase of 26.71 acres of vacant land in Las Vegas, Nevada. Guzzello, Venteau and Thornton were to be equal shareholders in a Nevada corporation formed to purchase, hold title to and develop the property.

 According to the complaint, the parties' agreement was amended at the closing, when Venteau "induced" Guzzello and Thornton to sign a new agreement which provided Guzzello and Thornton only with an option to purchase a one-third interest in the property. The complaint also alleges that when Guzzello sought to exercise his option in 1988, Venteau unilaterally increased the option price, conspired with others to "intimidate" and "threaten" him, and "coerced" him into executing a $ 120,000 promissory note in Venteau's favor. The complaint further alleges that Venteau has "continuously" attempted to collect a $ 300,000 debt from Guzzello since 1987, which in fact was owed to Venteau by another person.

 Previously, defendant Venteau moved for a stay of the instant action, in light of a pending action in the Nevada state court, Clark County, entitled Denise Walker v. Venteau et al., Case No. A280452, an action brought to quiet title to the Nevada property at issue, or, in the alternative, to dismiss the complaint for failure to state a claim. In addition, Venteau moved for the imposition of sanctions pursuant to Fed. R. Civ. P. 11.

 In support of his motions, Venteau submitted an affidavit in which he stated that in the Nevada action he and Guzzello had cross-claims against each other and that Guzzello's counsel had funded Denise Walker's lawsuit. Guzzello's cross-claims against Venteau included civil conspiracy, breach of contract, breach of implied covenant of good faith and fair dealing, duress and anticipatory repudiation.

 In addition, Venteau filed two memoranda of law. Significantly, both memoranda were devoted exclusively to Venteau's motion to stay, and he provided no legal authority to the Court in support of his motion to dismiss the RICO claim or for the imposition of sanctions.

 On June 5, 1991, this Court denied, without prejudice, Venteau's motions to dismiss for failure to state a claim and for sanctions. However, the Court granted Venteau leave to renew the motions within thirty days if made in accordance with the Federal Rules of Civil Procedure, the Local Civil Rules of the Eastern District of New York, and the Court's own rules of motion practice.

 II. PROCEDURAL SETTING

 Venteau renewed the motions within the mandated thirty day period. Having converted the Rule 12(b)(6) motion into one for summary judgment, the Court now looks to the documentary evidence and affidavits submitted by both parties.

 In his July 3, 1991 affidavit in support of the motion, counsel for the defendant alleges that the complaint "fails as a matter of law to allege a pattern of racketeering activity as required by the RICO statute" and "does not adequately allege that each defendant participated in the affairs of a particular enterprise to [sic] a pattern of racketeering activity" (July 3, 1991 Carpentier Affidavit, PP8-9). Counsel deduces that the complaint "not only fails for its vagueness in these respects, but it is also inadequate under Rules 9(b) and 12" (P10).

 In regard to the consolidated Nevada state court actions, counsel for the plaintiff states that on "April 9, 1991, the Judge in the consolidated Las Vegas state court actions ordered that the Discovery Commissioner's Report and Recommendations be affirmed and adopted" (P13). The Commissioner had recommended that plaintiff Guzzello's answers and counterclaims be "dismissed with prejudice." Therefore, counsel argues, ...


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