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JERRY KUBECKA, INC. v. AVELLINO

August 16, 1995

JERRY KUBECKA, INC., ROBERT M. KUBECKA, INC., NINA S. KUBECKA, Individually and as Administratrix of the Estate of ROBERT M. KUBECKA, CATHY LYNN KUBECKA-BARSTOW, Individually and as Administratrix of the Estates of DONALD EDWARD BARSTOW and JERRY KUBECKA, Plaintiffs, against SALVATORE AVELLINO, ANTHONY CASSO, SSC CORPORATION and SALEM SANITARY CARTING CORPORATION, Defendants.


The opinion of the court was delivered by: EUGENE H. NICKERSON

 NICKERSON, District Judge:

 Plaintiffs brought this action against defendants alleging four claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968, and five New York state law claims.

 The plaintiffs consist of two New York corporations and three individuals. Plaintiff Jerry Kubecka is the sole shareholder of the two corporations, Jerry Kubecka, Inc. and Robert M. Kubecka, Inc., referred to hereafter as the Kubecka Corporations. The other two individual plaintiffs are Nina S. Kubecka and Cathy Lynn Kubecka-Barstow. Each sues both individually and as the personal representative of her deceased husband and administratrix of his estate.

 The defendants are two individuals, Salvatore Avellino and Anthony Casso, high ranking members of the Lucchese Organized Crime Family (the Lucchese Family) and two New York corporations, SSC Corporation and Salem Sanitary Carting Corporation (Salem Corporation), both allegedly operated and controlled by Avellino.

 The complaint alleges, in substance, the following.

 Avellino, acting for himself and SSC Corporation and Salem Corporation, and Casso ordered or approved the murders on August 10, 1989 of the two decedents, Robert Kubecka and Donald Barstow. These murders were charged as predicate acts in a sealed 1990 indictment of Avellino, Casso, and others, asserting violations of RICO. On February 17, 1994, Avellino pleaded guilty to conspiring to commit the murders. Avellino also committed various other RICO predicate acts, including the extortion of the Kubeckas, Barstow, and the Kubecka Corporations.

 SSC Corporation and Salem Corporation, both controlled by Avellino, and the Kubecka Corporations were engaged in the Long Island carting industry, which Avellino allegedly controlled. Avellino, Casso and others sought to stop the Kubeckas and the Kubecka Corporations from soliciting garbage disposal contracts at stops historically "belonging" to other carters. As retribution for the assistance given by Robert Kubecka and Barstow to prosecuting officials investigating organized crime's control of the Long Island carting industry, Avellino and Casso arranged and directed the murders.

 The murders injured the Kubecka Corporations by eliminating the executives conducting and supervising their business and by compelling the corporations to cease their business operations and sell their assets at a distress price.

 The murders injured the business and property of the individual plaintiffs because they lost the decedents' future earnings, as well as the profits and dividends from the Kubecka Corporations, lost the value of the assets of the Kubecka Corporations sold at a distress price, and lost the funds expended for security measures to protect the individual plaintiffs and their families from Avellino, Casso and their associates.

 The Lucchese Family is also a RICO "enterprise." Avellino and Casso conducted and participated in the conduct of the Lucchese Family through the foregoing alleged pattern of racketeering activity.

 Each of the widows in her capacity as personal representative and administratrix asserts New York state law claims for battery of her husband and for his wrongful death. Jerry Kubecka brings a claim for loss of the services of his son Robert M. Kubecka.

 The complaint also alleges under the heading of "statute of limitations avoided" that Avellino and Casso used fraudulent and violent means to conceal their involvement in the murders so that plaintiffs were unable to learn the facts of their claims against the defendants until Avellino and Casso were indicted, the public media reported testimony of a witness who had withdrawn from the Lucchese Family, and Avellino had pleaded guilty to the murders.

 Plaintiffs seek treble damages on the RICO claims and actual damages plus $ 10,000,000 punitive damages on the state law claims.

 The defendants Avellino, SSC Corporation, and Salem Corporation have moved to dismiss the complaint as insufficient on its face and barred by the applicable statutes of limitations. The plaintiffs have moved for a default judgment against Casso and for summary judgment on the RICO claims.

 STANDING OF INDIVIDUAL PLAINTIFFS TO BRING RICO CLAIMS

 The RICO claims of the individual plaintiffs, the two administratrices and Jerry Kubecka, assert that they have been injured in their business and property by the murders, the administratrices because they lost the decedents' future earnings, and Jerry Kubecka because he has had a loss of profits and dividends from the Kubecka Corporations, and a loss due to the sale of the assets of those corporations at a distress price. All the individual plaintiffs claim a loss because they incurred expenses to protect themselves and their families against Avellino and Casso.

 The RICO statute provides, in pertinent part, 18 U.S.C. § 1964(c), that any person "injured in his business or property by reason of a violation" of RICO "may sue therefor" and recover threefold the damages sustained, plus costs and a reasonable attorney's fee.

 The moving defendants say that the individual plaintiffs lack standing to bring the RICO claims.

 The analysis of § 1964(c) by the Supreme Court in Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 112 S. Ct. 1311, 117 L. Ed. 2d 532 (1992), makes it clear that Jerry Kubecka may not recover under that section. As Justice Souter's opinion states, one could read the section to mean that a plaintiff who sustains an injury to his property may recover simply on a showing that the defendant violated RICO, the plaintiff was injured, and the defendant's violation was a "but for" cause of the injury. 112 S. Ct. at 1316. Jerry Kubecka, as sole shareholder of both the Kubecka Corporations, would presumably have a RICO claim under such a reading. His corporations were injured by elimination of their two key executives, and, according to the complaint, his property interest in the value of the corporations whose stock he owned was thereby diminished.

 The Holmes decision rejects such an expansive reading. Adopting earlier interpretations of the same language in the Clayton Act, the Court held that a plaintiff's right to sue under Section 1964(c) required a showing not only that the defendant's violation was a " but for" cause of the injury but was the "proximate" cause as well. 112 S. Ct. at 1317. This requires "some direct relation" between the injury asserted and the injurious conduct alleged. Id. at 1318.

 Whatever injury Jerry Kubecka may have suffered to his "property" was in his capacity as the sole shareholder of the Kubecka Corporations. Only insofar as the acts of the defendants first injured the two decedents and their elimination injured the corporations was Jerry Kubecka's property injured. His injury was "purely contingent on the harm suffered" by the decedents and in turn by the Kubecka Corporations See id. at 1319. See also, Manson v. Stacescu, 11 F.3d 1127, 1131 (2d Cir. 1993) (a shareholder generally does not have standing to bring an individual RICO action for injuries to the corporation "even when the plaintiff is the sole shareholder of the injured corporation.").

 The general interest in deterring injurious conduct would be served by permitting the Kubecka Corporations, which suffered a more direct and immediate business injury than did Jerry Kubecka, to vindicate that interest. Indeed, those two corporations seek to do that in this law suit.

 The court concludes that the murders of the decedents did not proximately cause an injury to Jerry Kubecka's business or property.

 The claims of the executrices and personal representatives stand on a different footing. Those claims require the court to focus on whether, within the meaning of 18 U.S.C. § 1964(c), those widows not only are "persons" who "may sue" but also are persons whose "business or property" has been "injured" by the murders. The definition of the word "person" in RICO includes "any individual or entity capable of holding a legal or beneficial interest in property." 18 U.S.C. § 1961(3). The executrices are certainly "individuals" "capable" of holding a "legal interest" in a "business or property." The words "business" and "property" are not defined in the statute.

 New York State provides for a wrongful death action by a personal representative of a decedent survived by "distributees" to recover damages "for the pecuniary injuries resulting from the decedent's death to the persons for whose benefit the action is brought," namely, the "distributees." N.Y. Est. Powers & Trusts Law (EPTL) §§ 5-4.1, 5-4.3(a).

 If Robert M. Kubecka and Barstow had been merely disabled by the attempt on their lives but survived, presumably they would have had a RICO claim for lost earnings from their business activities because they had been injured in their "business or property." See, e.g. Hunt v. Weatherbee, 626 F. Supp. 1097, 1101 (D. Mass. 1986) (plaintiff forced out of job and disabled for future such work asserts a claim for injury to her "business or property" within the meaning of § 1964(c)); Rodonich v. House Wreckers Union, Local 95 627 F. Supp. 176, 180 (S.D.N.Y. 1985) (allegation of lost wages asserts an injury to "property" under § 1964(c)); but see Grogan v. Platt, 835 F.2d 844 (11th Cir. 1988).

 In the event that while alive Robert M. Kubecka and Barstow had brought RICO claims under § 1964(c) and had died before the litigation was concluded, their executrices could have succeeded to their claims and recovered on behalf of their estates. RICO claims survive the death of a plaintiff. See, e.g., Faircloth v. Finesod, 938 F.2d 513, 518 (4th Cir. 1991); ...


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