DELRIO-MOCCI et al v. CONNOLLY PROPERTIES INC. et al

Filing 114

LETTER OPINION (Motion to Dismiss Count 1). Signed by Judge William J. Martini on 4/8/09. (gh, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
M A R T I N L U T H E R K I N G JR . FE D E R A L B L D G . & U . S . C O U R T H O U S E 5 0 W A L N U T ST R E E T , P. O . B O X 419 N E W A R K , N J 07101-0419

[phone] WILLIAM J. MARTINI JUDGE

L E T T E R OPINION A p ril 8, 2009 C a rla P. Maresca, Esq. D e a s e y, Mahoney & Valentini, Ltd. 8 0 Tanner Street H a d d o n f ie ld , NJ 08033 A tto r n e y s for Plaintiffs E liz a b e th F. Lorell S c h w a rtz , Simon, Edelstein, Celso & Kessler, LLP 4 4 Whippany Road, Suite 210 P .O . Box 2355 M o rris to w n , NJ 07962 A tto r n e y s for Defendants S e a n R. Kelly S a ib e r LLC O n e Gateway Center, 13 th Floor N e w a rk , NJ 07102-5311 A tto r n e y s for the Individual Defendants (as to Count I only) R e: M a rib e l DelRio-Mocci, Linda Elliott, Robert Bolmer and Charlsey S h e p p a r d v. Connolly Properties Inc., David M. Connolly, Dana Ayala, and D a n ia Molina C iv il Action No. 08-2753 (WJM)

D e a r Counsel: T h is matter comes before the Court on a Motion to Dismiss pursuant to Rule 1 2 (b )(6 ) of the Federal Rules of Civil Procedure by Defendants David M. Connolly, Dana 1

Ayala, and Dania Molina (collectively "Defendants"). There was no oral argument. Fed. R . Civ. P. 78. For the reasons stated below, Defendants' Motion to Dismiss Count I of P la in tif f s ' Second Amended Complaint ("SAC") is GRANTED. BACKGROUND D e f e n d a n ts manage multiple rental apartment complexes in New Jersey and P e n n sylv a n ia (Pl.'s SAC ¶ 22; Dft.'s Br. 5). Plaintiffs DelRio-Mocci, Elliott, Bolmer, a n d Sheppard ("Plaintiffs") are present or former tenants of various Plainfield, NJ b u ild in g s run by Defendants (Pl.'s SAC ¶¶ 14-17) . Plaintiff Bolmer ("Plaintiff" or " B o lm e r" ), the sole plaintiff bringing Count I, has resided at Defendants' Pingry Arms b u ild in g since February 2004, before the building was run by Defendants (Pl.'s SAC ¶ 1 6 ). Plaintiffs allege that the manner in which Defendants operate their rental real estate b u s in e s s violates the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the F e d e ra l Fair Housing Act ("FFHA"), the New Jersey Fair Housing Act ("NJFHA"), and th e New Jersey Conscientious Employee Act ("NJCEA") (Pl.'s SAC ¶ 1). Specifically, Plaintiffs allege that Defendants actively seek out illegal aliens as p ro s p e c tiv e tenants because their immigration status makes them easy to exploit. (Pl.'s S A C ¶ 4). The SAC asserts that Defendants believe illegal aliens are more inclined to a c c e p t sub-standard housing conditions, more willing to pay higher rents for apartments in disrepair, and less likely to report housing code violations to the authorities (Pl.'s SAC ¶ 7). As a result of renting to illegal aliens, Plaintiffs allege, Defendants are able to allow s lu m -lik e conditions to proliferate in their buildings without having to offer c o m m e n s u ra te reductions in rent.1 P la in tif f s further allege that Defendants engage in discriminatory housing p ra c tic e s , segregating their apartment buildings according to impermissible criteria such a s race, national origin, immigration status, and source of income. (Pl.'s SAC ¶ 23). The a lle g e d purpose of this segregation is to prevent tenants of different racial and ethnic b a c k g ro u n d s from interacting with each other, which Defendants supposedly believe will le a d to fighting between the groups and attract the attention of the authorities. According to Plaintiffs, "by segregating illegal aliens and U.S. citizen tenant groups, [Defendants] d e c re a s e d the risk of unwelcome investigations or enforcement-related visits to [the] p ro p e rtie s by immigration agents, police officers, housing inspectors, or social agency p e rs o n n e l," which could lead to the discovery of the illegal alien tenants (Pl's SAC ¶ 30).

A m o n g the slum-like conditions that Plaintiffs allege are broken locks, doors, windows, and plumbing, v e r m in infestations, and the use of common areas to conduct illegal activity.

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Plaintiffs filed this suit in June 2008 seeking actual, compensatory, and punitive d a m a g e s for FFHA, NJFHA, and NJCEA violations, treble damages for RICO violations, a n injunction against Defendants from perpetrating further racketeering activity, equitable re lie f to remove the effects of existing housing discrimination and prevent it in the future, a n d attorney's fees and costs. Plaintiffs amended their complaint twice, filing the SAC in D e c e m b e r 2008. On December 22, 2008, Defendants filed this Motion to Dismiss Count I of P la in tif f s ' SAC, the count alleging a RICO violation, pursuant to Fed. R. Civ. P. 12(b)(6). In short, Defendants allege that Count I of the SAC does not state a RICO violation and th e re f o re fails to state a claim for which relief can be granted. Plaintiff Bolmer opposed D e f e n d a n ts ' motion. Additionally, various public interest groups moved for leave to file a n d filed an amicus brief supporting the contention that Plaintiff failed to state a RICO v io la tio n . The motion was fully briefed on January 28, 2009. A N A L Y S IS A . Standard of Review In deciding a motion to dismiss under Fed. R. Civ. P. 12(b), all allegations in the c o m p la in t must be taken as true and viewed in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc., v. M ira g e Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998). When considering a Rule 1 2 (b )(6 ) motion to dismiss for failure to state a claim, a court may take into account only th e complaint, exhibits attached to the complaint, matters of public record, and u n d is p u te d ly authentic documents if the plaintiff's claims are based upon those d o c u m e n ts . See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1 1 9 6 (3d Cir. 1993). If, after viewing the allegations in the complaint in the light most f a v o ra b le to the plaintiff, it appears that no relief could be granted "under any set of facts th a t could be proved consistent with the allegations," a court may dismiss a complaint for f a ilu re to state a claim. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). Although a complaint does not need to contain detailed factual allegations, "the `g ro u n d s ' of [the plaintiff's] `entitlement to relief' requires more than labels and c o n c lu s io n s , and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965, 167 L. Ed. 2d 929 (2007). Thus, th e factual allegations must be sufficient to raise a plaintiff's right to relief above a s p e c u la tiv e level. See id. at 1964-65. Furthermore, although a court must view the a lle g a tio n s as true in a motion to dismiss, it is "not compelled to accept unwarranted in f e re n c e s , unsupported conclusions or legal conclusions disguised as factual a lle g a tio n s ." Baraka v. McGreevey, 481 F. 3d 187, 211 (3d Cir. 2007). 3

B. RICO Conspiracy Claim T h e RICO statute provides, in pertinent part, that it is unlawful for "any person e m p lo ye d by or associated with any enterprise engaged in, or the activities of which a f f e c t, interstate or foreign commerce, to conduct or participate, directly or indirectly, in th e conduct of such enterprise's affairs through a pattern of racketeering activity." 18 U .S .C . § 1962(c). Conspiring to violate the above provision is also prohibited. 18 U.S.C. § 1962(d). The statute defines a pattern of racketeering activity as committing two or m o re acts in violation of an enumerated list of federal and state laws. A violation of the Immigration and Nationality Act ("INA"), 8 U.S.C. § 1324, constitutes a predicate act of ra c k e te e rin g activity. 18 U.S.C. § 1961(1)(F) (incorporating § 274 of the INA). C o u n t I of the SAC alleges that Defendants have violated RICO's conspiracy p ro v is io n . Specifically, the Count states that Defendants have entered into a conspiracy to engage in an "Illegal Alien Rental Scheme" ("the Scheme"), renting apartments to ille g a l aliens under the theory that such individuals are more likely to over-pay for subs ta n d a rd housing and less likely to report housing code violations to the authorities (Pl.'s S A C ¶ 41). The alleged result of this activity has been to deny Plaintiff and other "lawful te n a n ts" of "the full value of their leasehold" because it enables Defendants to keep the b u ild in g s in poor condition without reducing rents (Pl.'s SAC ¶ 7). P la in tif f Bolmer asserts that the members of the Scheme have conducted their b u s in e s s by "knowingly harboring numerous illegal aliens in [Defendants' buildings] as w e ll as encouraging and inducing those illegal aliens to reside within [the buildings], in th e last four years alone," in violation of the INA (Pl.'s SAC ¶ 4). The harboring, e n c o u ra g in g , and inducing conduct is meant to represent a "pattern of racketeering" w ith in the meaning of RICO. Plaintiff also alleges that Defendants Connolly Properties, A ya la , and Molina are "persons" pursuant to RICO, Connolly Properties constitutes a R IC O enterprise, the harm to Plaintiff is cognizable under RICO, and it was proximately c a u s e d by Defendants (Pl.'s SAC ¶¶ 34, 75-76) . The crux of Plaintiff's argument is that renting apartments to illegal aliens c o n s titu te s racketeering activity because it constitutes harboring, encouraging, or inducing a n illegal alien in violation of the INA. However, no court in this circuit or in any other h a s ever found this to be the case­ without more, renting an apartment to an alien does n o t amount to harboring, encouraging, or inducing. Thus Plaintiff has not alleged a p a tte rn of racketeering activity and the RICO claim cannot survive a motion to dismiss. T o violate the INA's prohibition on harboring an illegal alien, it must be shown th a t a person "knows or recklessly disregards the fact that an alien is illegally in this 4

country... and conceals, harbors, or shields, or attempts to conceal, harbor, or shield, the a lie n from detection." See 8 U.S.C. § 1324(a)(1)(A)(iii). A recent Third Circuit case held th a t to sustain a conviction under this section, the conduct at issue must (1) tend " s u b s ta n tia lly to facilitate an alien's remaining in the United States," and (2) "prevent g o v e rn m e n t authorities from detecting" the alien's unlawful presence. U.S. v. Silveus, 5 4 2 F.3d 993, 1003 (3d Cir. 2008). The second element is critical. Id. No court has ever h e ld that the mere provision of housing to an illegal alien constitutes harboring, because th e second element is lacking. See id. at 1004 (finding that Defendant's conduct, a llo w in g an individual whom she knew was in the U.S. illegally to live with her in her a p a rtm e n t, did not constitute harboring); see also Zavala v. Wal-Mart Stores, 393 F. Supp. 2 d 295, 307 (D.N.J. 2005) (a "contractor's `lodging' of an undocumented worked and `p u ttin g him to work' falls far short of alleging that Wal-Mart sheltered illegal aliens for th e purposes of concealing them and avoiding their detection by immigration a u th o ritie s" ). Moreover, the caselaw indicates that for conduct to satisfy the second element of th e test, it must be affirmative and material. See U.S. v. Ozcelik, 527 F.3d 88, 99 (3d Cir. 2 0 0 8 (advising an illegal alien to "lay low and to stay away from the address on file with th e INS" did not constitute preventing the authorities from detecting an alien's unlawful p re s e n c e because the advice was "obvious information that any fugitive would know"). But see U.S. v. Tipton, 518 F.3d 591, 595 (8th Cir. 2008) (hiring undocumented aliens, f in d in g them apartments, paying for their rent and utilities, providing them with tra n s p o rta tio n to and from their jobs to avoid their detection, and maintaining counterfeit im m ig ra tio n documents for them did constitute harboring). H e re , Plaintiff has not alleged facts sufficient to support the predicate act of h a rb o rin g . Defendants rented the apartments to illegal aliens with the purpose of making a profit. This is easily distinguished from situations in which parties employ u n d o c u m e n te d workers and then provide them with housing, free of charge or tied to their w a g e s , in order to conceal their presence from the authorities. Defendants did not take a n y affirmative or material steps to prevent the authorities from learning about the e x is te n c e of their illegal immigrant tenants. Plaintiff's claim that Defendants' practice of s e g re g a tin g the illegal aliens from the other tenants was done to prevent their detection f ro m the authorities is not persuasive. Moreover, this behavior falls far short of the c o n d u c t that the caselaw recognizes as affirmative and material steps to conceal their p re s e n c e from the authorities. Similarly, Defendants' behavior also fails to rise to the level of "encouraging" or " in d u c in g " in violation of the INA. The District of New Jersey has found that the sale of c o u n te rf e it identity or immigration documents can constitute unlawful encouraging or in d u c in g but that providing housing does not. Zavala, 393 F. Supp. 2d at 308. 5

Thus, Plaintiff has failed to allege a pattern of racketeering activity. Without such, th e re can be no RICO violation and no RICO conspiracy violation. Plaintiff has failed to s ta te a claim for which relief can be granted, and consequently Count I cannot survive a m o tio n to dismiss.2 C O N C L U S IO N F o r the reasons stated above, Defendants' motion to dismiss the SAC is GRANTED. An appropriate order follows.

/s/ William J. Martini WILLIAM J. MARTINI, U.S.D.J.

D e fe n d a n ts ' Motion to Dismiss argues that Plaintiff's RICO count suffers from other infirmities beyond its fa ilu r e to identify a pattern of racketeering activity. Specifically, Defendants claim that Plaintiff does not have s ta n d in g to bring a RICO claim because Bolmer, as a tenant of the apartment and not an owner, he did not suffer in j u r y to his business or property as required. Further, Defendants maintain that Bolmer has not demonstrated that D e fe n d a n ts were the proximate cause of its injuries. However, there is no need for the Court to address these d e fic ie n c ie s at length because in the absence of a pattern of racketeering activity, the Count cannot withstand a m o tio n to dismiss.

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