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CITY OF CHICAGO HTS. v. LOBUE

January 31, 1996

THE CITY OF CHICAGO HEIGHTS, ILLINOIS, Plaintiff,
v.
NICK LOBUE, individually, NICK LOBUE d/b/a A.A. ARKEN CHEMICAL COMPANY, JOHN GLIOTTONI, JR., CHARLES PANICI, RALPH GALDERIO, DONALD PRISCO, ERNEST MOLYNEUX, LOUISE MARSHALL, GENE WUEST d/b/a ABLE AND WILLING PLUMBING, DONALD GIPPLE, MARTIN WONDAAL, CHARLES FITZPATRICK, and GULF COAST LABORATORIES, INC., Defendants.



The opinion of the court was delivered by: CASTILLO

 RELEVANT FACTS1

 During the years 1976 to 1991, Nick Lobue devised many a scheme to profit from the City of Chicago Heights. He began as a contractor, charging the City during 1976-1979 for quantities of a water treatment chemical that he never delivered. On twelve occasions between 1976 and 1979, Lobue billed the City for 35,000 pounds of the chemical but only delivered 24,000 pounds. The price during that period was fifty cents or more per pound. (See Pl. Facts, Ex. B, C.) After becoming a City council member in 1979, he continued the overbilling scam in concert with the supplier of the chemical, taking kickbacks generated by the overbilling. On eighteen occasions between 1979 and 1984, the City was billed by the supplier for 35,000 pounds when only 24,000 were delivered, and on at least seventeen of these occasions, Lobue received kickbacks of $ 6,000.00 from the supplier. It is undisputed that the price paid by the City was intended to cover the cost of the kickbacks.

 In another scheme, Lobue arranged for a particular plumbing company to receive a City contract to replace water meters in exchange for $ 80,000.00 in kickbacks. Once again, the money for the kickbacks was generated by overbilling the City by that amount.

 Martin Wondaal was a participant in two other schemes, paying bribes and kickbacks in connection with two City contracts, the 1980-83 garbage hauling contract, and a 1981 landfill operation contract. Wondaal paid Lobue and others *fn2" approximately $ 100,000.00 for the garbage hauling contract, and at least $ 50,000.00 during the course of the landfill operation, which terminated in 1986. Lobue also solicited and received bribes and kickbacks on various other City business, including a cable television contract, the 1983 garbage hauling contract, a contract to pick up bulk waste, a water pipeline contract, an HMO contract, and a 4:00 a.m. liquor license for a bar. Lobue's total "take" from all of these various entrepreneurial activities was at least $ 161,860.00.

 Following a criminal trial against former Chicago Heights officials and various City contractors under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.,3 the City of Chicago Heights brought this private RICO suit for damages against several of the same people. Now pending before the Court is the City's motion for summary judgment against Nick Lobue, and its motion for partial summary judgment as to damages against Martin Wondaal. We previously granted summary judgment against Wondaal as to liability under RICO for bribery and kickbacks related to garbage hauling and landfill operation contracts, see City of Chicago Heights v. Lobue, 1995 U.S. Dist. LEXIS 6334, 1995 WL 290389 (N.D. Ill. May 10, 1995). For the reasons given below, we grant summary judgment against defendant Lobue as to liability and also as to certain theories of damages advanced by the City, but deny summary judgment as to the City's other damages theories. We also deny the City's motion for summary judgment against Wondaal on damages.

 LEGAL STANDARDS

 Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The nonmovant must "make a showing sufficient to establish the existence of [the] element[s] essential to that party's case, and on which that party will bear the burden of proof at trial" in order to withstand a motion for summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). "In determining whether factual issues exist, a reviewing court must view all the evidence in the light most favorable to the non-moving party." Collins v. American Optometric Ass'n, 693 F.2d 636, 639 (7th Cir. 1982). However, if "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party there is no 'genuine' issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).

 ANALYSIS

 In Lobue's response to the City's motion for summary judgment against him, he states that he does not contest liability under RICO. Likewise, he makes no response to the City's statement of material facts submitted pursuant to Local General Rule 12(m), thus admitting all of those facts under subsection (n) of that rule. See Flaherty v. Gas Research Inst., 31 F.3d 451, 453 (7th Cir. 1994). Because we find that there is no genuine issue of material fact as to Lobue's liability, we grant summary judgment in favor of the City as to Lobue's liability under 18 U.S.C. § 1962. The remaining issue is whether summary judgment is appropriate on the damages aspects of the City's separate claims against Lobue and Wondaal.

 Damages Recoverable from Lobue

 The City seeks to recover damages from Lobue that fall into two broad categories: the recovery of direct financial loss sustained by the City; and the divestment and transfer to the City of Lobue's "ill-gotten gains." The City claims that both types of damages are recoverable under the RICO civil remedies provision, 18 U.S.C. § 1964, and that both should be trebled under that section.

 There is little doubt that the first category of damages, direct financial losses, may be recovered by the City under the provisions of § 1964. Section 1964(c), which governs the remedies available to private plaintiffs in civil RICO suits, see DeMent v. Abbott Capital Corp., 589 F. Supp. 1378, 1384 (N.D. Ill. 1984), provides:

 
Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and ...

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