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DE FALCO v. DIRIE

March 13, 1996

JOSEPH DE FALCO, ELEANOR DE FALCO, ROBERT BROWN, JANICE BROWN, TOP OF THE WORLD ESTATES, INC., and JOBO ASSOCIATES, INC., Plaintiffs, -against- WILLIAM DIRIE, JOHN BERNAS, JOHN BERNAS, INC., JML QUARRIES, INC.,
v.
EDWARD CURTIS, ALFRED STEPPICH, RICHARD FERBER, DONALD MECKLE, PAUL ROUIS, HARRY FISHER, TERRY KELLY, WILLIAM C. ROSEN, and GEORGE LAHM, Defendants.



The opinion of the court was delivered by: PARKER

 PARTIES

 Plaintiff, Top of the World Estates, Inc. ("TOP"), is the owner and developer of approximately 1450 acres of land in the Town of Delaware which is located in Sullivan County, New York. Located on this property is a residential development known as "Top of the World".

 Plaintiff, JOBO Associates, Inc. ("JOBO"), owns 250 acres adjoining the TOP property which is used as a sand and gravel bank.

 The individual Plaintiffs, Joseph DeFalco, Eleanor DeFalco, Robert Brown and Janice Brown are the principal officers, directors and shareholders of both TOP and JOBO.

 Defendant William Dirie was the elected Supervisor of the Town of Delaware from January 1986 to December 1991. In this position, Dirie served as a member of the Town Board and as a member of the Town Legislature.

 Defendant John Bernas is a contractor and owner of Defendant JML Quarries, Inc., ("JML") and Defendant John Bernas, Inc. ("JBI").

 Defendant V. Edward Curtis was appointed Chairman of the Delaware planning Board from 1964 to December 1994. He is also engaged in the nursery and landscaping business.

 Defendant Alfred Steppich was the appointed Building Inspector of Delaware from 1986 to 1991.

 Defendant Richard Ferber was an elected Tax Assessor for the Town of Delaware from 1976 to 1994 and was Chairman of the Delaware Tax Assessors from 1990 to 1994.

 Defendant Donald Meckle was an elected Tax Assessor for the Town of Delaware from 1978 to 1993 and was Chairman of the Delaware Tax Assessors from 1979 to 1990.

 Defendant Paul Rouis was the appointed Sullivan County Administrator from 1977 to June 1993.

 Defendant Harry Fisher was at all relevant times an overseer of the Plaintiffs' business operations.

 Defendant Terry Kelly was at all relevant times chief engineer of the Town of Delaware.

 Defendant William Rosen was the appointed Town Attorney for the Town of Delaware from 1986 to December 1991. He was also Sullivan County Attorney from 1988 to 1991.

 Defendant George Lahm has, and continues to be, the Town Highway Superintendent for the Town of Delaware since 1976.

 The complaint alleges that the Defendants, an assortment of public officials, private individuals and corporations have extorted large sums of money and property through misuse of certain public offices.

 In 1987, TOP and JOBO purchased 1700 acres of land in Delaware Township. The bulk of the land is being developed as a residential community, the remainder is used as a sand and gravel pit. Plaintiffs allege that Defendant William Dirie, Supervisor of the town of Delaware, told them that he could assure prompt issuance of all approvals and permits if they complied with his demands.

 Plaintiffs claim that this action arises out of a conspiracy, plan and scheme among the defendants to use the Town of Delaware as a racketeering enterprise to extort large sums of money, and to further extort real and personal property, and/or interests therein, in violation of 18 U.S.C. § 1962(c).

 MOTIONS TO DISMISS

 Defendants first move to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6) as not stating a claim upon which relief can be granted. On a dismissal motion for failure to state a claim, the general rule is that the allegations in the Plaintiffs' complaint are deemed to be true and must be liberally construed in the light most favorable to the Plaintiffs. Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir. 1984), cert. denied, 470 U.S. 1084, 85 L. Ed. 2d 144, 105 S. Ct. 1845 (1985). A complaint should not be dismissed unless it appears beyond a reasonable doubt that the Plaintiffs cannot in any way establish a set of facts to sustain a claim which would permit relief. Hughes v. Rowe, 449 U.S. 5, 10, 66 L. Ed. 2d 163, 101 S. Ct. 173 (1980), Bass v. Jackson, 790 F.2d 260, 262 (2d Cir. 1986). However, "a complaint consisting of nothing more than naked assertions, and setting forth no facts upon which a court could [grant relief] ... fails to state a claim under Rule 12(b)(6)." Martin v. New York State Dept. of Mental Hygiene, 588 F.2d 371, 372 (2d Cir. 1978).

 Plaintiffs have adequately pled a RICO violation as to all the named Defendants for purposes of this motion to dismiss. A reasonable trier of fact could find a pattern of racketeering activity and Defendants' motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) therefore denied.

 The Second Circuit has outlined the various components of any § 1962 RICO violation: (1) that the defendant (2) through the commission of two or more acts (3) constituting a 'pattern' (4) of 'racketeering activity' (5) directly or indirectly invests in, or maintains interest in, or participates in (6) an 'enterprise' (7) the activities of which affect interstate commerce or foreign commerce. See Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir. 1983), cert. denied sub. nom., Moss v. Newman, 465 U.S. 1025, 104 S. Ct. 1280, 79 L. Ed. 2d 684 (1984). Browning Avenue Realty Corp. v. Bernard J. Rosenshein, 774 F. Supp. 129, 136 (S.D.N.Y. 1991) (Sweet).

 More generally,

 
the RICO civil liability provision confers standing on "any person injured in his business or property by reason of a violation of Section 1962." 18 U.S.C. § 1964(c). Thus, in order to have standing, a plaintiff must show: (1) a violation of 1962; (2) injury to business or property; and (3) causation of the injury by the violation.

 Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 23 (2d Cir. 1990) (citation omitted).

 Construing the factual allegations of the second amended complaint in the light most favorable to Plaintiffs, Plaintiffs have alleged an adequate and colorable cause of action under RICO. The three elements set forth above in Hecht have been satisfied.

 The first prong of the Hecht test requires that there be a violation of 18 U.S.C. 1962. "Congress did not deploy RICO as an instrument against all unlawful acts. It targeted only predicate acts catalogued under section 1961(1)." Id. at 25. 18 U.S.C. § 1961(1) defines racketeering activity as:

 
(A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, ..... which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of Title 18 United States Code: .... ...

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