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PELFRESNE v. STEPHENS

January 27, 1999

D. PELFRESNE, TRUSTEE AND S. EISENBERG, TRUSTEE, PLAINTIFFS,
v.
DONALD E. STEPHENS, INDIVIDUALLY, AND AS VILLAGE PRESIDENT, LORRAINE CLEMMENSEN, JOHN DORGAN, ANTHONY ESPOSITO, JACK HASSELBERGER, EMMETT MICHAELS, BRADLEY STEPHENS, INDIVIDUALLY AND AS MEMBERS OF VILLAGE BOARD OF TRUSTEES, VITO CORRIERO, INDIVIDUALLY AND AS DIRECTOR OF PUBLIC WORKS, AUGUST SANSONE, INDIVIDUALLY AND AS DIRECTOR OF PURCHASING AND COMMERCIAL LEASING, TERRY REGAN, INDIVIDUALLY AND AS DIRECTOR OF LICENSING, EDWARD M. BURKE, INDIVIDUALLY, JOSEPH MARTINEZ, INDIVIDUALLY, JOSEPH KUSPER, INDIVIDUALLY, AND NICHOLAS PEPPERS, INDIVIDUALLY, DEFENDANTS.



The opinion of the court was delivered by: Gettleman, District Judge.

    MEMORANDUM OPINION AND ORDER

BACKGROUND

On July 29, 1996, plaintiffs D. Pelfresne ("Pelfresne") and S. Eisenberg ("Eisenberg") filed a seven-count complaint against defendants Donald E. Stephens ("D.Stephens"), individually and as the Village President,*fn1 Lorraine Clemmensen, John Dorgan, Anthony Esposito, Jack Hasselberger, Emmett Michaels, Bradley Stephens, individually and as members of the Village Board of Trustees, Vito Corriero, individually and as the Director of Public Works, and August Sansone ("Sansone"), individually and as the Director of Purchasing and Commercial Leasing. Plaintiffs alleged Sherman Act violations and state law claims for breach of contract and fraud. On February 3, 1997, the court granted defendants' motion to dismiss on grounds of abstention under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and the Anti-Injunction Act, 28 U.S.C. § 2283. See Pelfresne v. Village of Rosemont, 952 F. Supp. 589 (N.D.Ill. 1997) ("Pelfresne I"). The judgment order terminating the case was entered on February 4, 1997, and was docketed February 6, 1997.

On February 4, 1997, plaintiffs filed a fourteen-count amended complaint pursuant to Fed.R.Civ.P. 15(a), and a "motion for rehearing" of the court's February 3 memorandum opinion and order. On March 6, 1997, plaintiffs filed a motion for leave to file a second amended complaint. In the amended complaint, plaintiffs named three additional defendants-Terry Regan ("Regan"), as an individual and as the Head of Fire Prevention Bureau, Edward M. Burke ("Burke"), as an individual, and Joseph Martinez, as an individual-and alleged violations of anti-trust laws, plaintiffs' civil rights under 42 U.S.C. § 1983, plaintiffs' Fifth and Fourteenth Amendment rights under the United States Constitution, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., and Illinois state law. In the second amended complaint, plaintiffs made some minor changes and named two more defendants: Joseph Kusper ("Kusper"), as an individual; and Nicholas Peppers ("Peppers"), as an individual. On July 8, 1997, the court denied plaintiffs' motion for a rehearing and motion to file a second amended complaint. See Pelfresne v. Village of Rosemont, 174 F.R.D. 72 (N.D.Ill. 1997) ("Pelfresne II"). Thereafter, the court gave plaintiffs permission to file an amended RICO complaint.

On August 15, 1997, plaintiffs filed a third amended complaint alleging a civil RICO claim against all of the individual defendants. Defendants*fn2 moved to dismiss plaintiffs' complaint. On February 24, 1998, the court granted defendants' motion because plaintiffs had failed to justify their RICO allegations against each defendant. See Pelfresne v. Village of Rosemont, 22 F. Supp.2d 756 (N.D.Ill. 1998) ("Pelfresne III"). The court then granted plaintiffs leave to file a fourth amended complaint.

On April 8, 1998, plaintiffs filed a fourth amended complaint in which they replead their civil RICO claim. Count I alleges that all of the defendants except for Vito Corriero and Regan violated 18 U.S.C. § 1962(c); Count II alleges that all of the defendants conspired to violate RICO under 18 U.S.C. § 1962(d). Defendants have filed four separate motions to dismiss the fourth amended complaint pursuant to Fed.R.Civ.P. 12(b)(6). The motions were filed by the following groups of defendants, and will be addressed in the following order: (1) defendants D. Stephens, Lorraine Clemmensen, John Dorgan, Anthony Esposito, Jack Hasselberger, Emmett Michaels, and Bradley Stephens ("Stephens et al."); (2) defendants Sansone, Regan, and Vito Corriero ("Sansone et al."); (3) defendants Kusper and Peppers; and (4) defendant Burke.*fn3

FACTS

For purposes of a motion to dismiss, the court accepts all well-pleaded allegations in the complaint as true and draws all reasonable inferences in favor of the plaintiff. Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1428 (7th Cir. 1996). Pelfresne, as trustee, is legal title holder of a tract of land within the Village ("Parcel A"). Eisenberg, as trustee, is legal title holder of a different tract of land within the Village ("Parcel B") on which a masonry restaurant building stands. Although Parcel A is presently devoted to agricultural use, Pelfresne has well-known intentions to develop it for commercial use. Eisenberg owns, leases, and operates restaurants. She and her predecessors in title have regularly leased Parcel B to food service tenants. Both parcels are zoned for commercial use.

Plaintiffs claim that defendants have been trying to acquire what is now plaintiffs' property since 1979. Defendants have attempted to acquire the property by condemning it as "blighted," through eminent domain proceedings, and by raising the real estate taxes to confiscatory levels. On September 24, 1990, however, the Village, by and through Village President D. Stephens, entered into an agreement with plaintiffs' predecessor in title. The agreement provided for the uninterrupted continuation of "DD" Commercial zoning and use and enjoyment of Parcels A and B, including the right to develop, for a term of not less than 15 years.

Plaintiffs claim that defendants have failed to honor this agreement. Parcel B is zoned for restaurants and, according to plaintiffs, does not require a special use permit. Defendants, nevertheless, have denied permits and approvals to Eisenberg's prospective tenants. For example, defendant Corriero, the Director of Public Works for the Village, sent Eisenberg a letter dated May 14, 1996, stating that the Village was refusing to process her permit application for operating an International House of Pancakes ("IHOP") restaurant on Parcel B on the grounds that a special use permit was required and that no action could be taken on the project until a hearing was held before the Zoning Board of Appeals. Plaintiffs also allege that defendants sent their predecessor in title a letter dated July 17, 1996, stating that the Village intended to file an eminent domain action to acquire Parcels A and B as public park land and open space. On August 20, 1996, the Village initiated eminent domain proceedings, seeking to acquire plaintiffs' property.*fn4

Plaintiffs further allege that defendants' conduct is part of a broader ongoing scheme. According to plaintiffs, defendants acquire property in the Village by wrongfully condemning it as "blighted" or through "sham" eminent domain proceedings or the threat thereof. Defendants then either: (1) use the property for facilities or businesses owned or operated by the Village and award themselves lucrative concessions; or (2) collusively put the property into the hands of a few favored developers who, aided by improper real estate tax exemptions, have the ability to compete unfairly with private businesses. Defendants also use their real estate control and municipal powers to enrich themselves and their own businesses. For example, Sansone, the Director of Purchasing and Commercial Leasing, is given a bargain rent for his hot dog stand and a tax-free parking garage for his patrons. Plaintiffs claim Mayor D. Stephens has sold millions of dollars in real estate to the Village, despite obvious conflicts of interest. To further their scheme, defendants manipulate zoning, wrongfully deny permits, and cause harassment by the fire prevention inspector.

Plaintiffs allege that defendants Sansone, Kusper, Peppers, and Burke engaged in specific activities in furtherance of the larger scheme to defraud. According to plaintiffs, defendant Sansone executed a fraudulent tax protest in February 1994 in an attempt to raise real estate taxes on plaintiffs' property. Plaintiffs allege that defendants Kusper and Peppers enabled the Village to evade real estate taxes on much of the property it acquires by eminent domain by filing false affidavits with the taxing authorities. Plaintiffs also allege that defendant Burke sought tax records in an attempt to raise taxes on their property. Plaintiffs assert that, at present, almost all of the industrial and commercial real estate in the Village has been acquired by condemnation or eminent domain or the threat thereof and is controlled by defendants.

DISCUSSION

I. STANDARDS FOR A MOTION TO DISMISS

In ruling on a motion to dismiss, the court considers "whether relief is possible under any set of facts that could be established consistent with the allegations." See Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir. 1992). A claim may be dismissed only if it is beyond doubt that under no set of facts would a plaintiff's allegations entitle him to relief. See Travel All Over The World, Inc., 73 F.3d at 1429 (7th Cir. 1996); Venture Associates Corp. v. Zenith Data Systems Corp., 987 F.2d 429, 432 (7th Cir. 1993). The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide its merits. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990).

II. CIVIL RICO CLAIMS

A. Defendants Stephens et al.'s Motion to Dismiss

Stephens et al. move to dismiss the complaint, arguing that: (1) they are shielded by the doctrine of legislative immunity; and (2) plaintiffs fail to plead fraud with the requisite particularity required by Fed.R.Civ.P. 9(b). Stephens et al. also incorporate Sansone et al.'s arguments that plaintiffs' claim is not ripe and that the court should abstain from exercising jurisdiction pursuant to the doctrine of Colorado ...


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