Feloni v. Coco

JOHN FELONI, Plaintiff, v. PETER M. COCO, FRANK A. CIERI, and OLDE CENTER VENTURES, INC., Defendants.

CIVIL ACTION NO. 16-12178-GAO

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

March 4, 2019

REPORT AND RECOMMENDATION RE: DEFENDANTS' MOTION TO DISMISS PLAINTIFF JOHN FELONI'S SECOND AMENDED COMPLAINT

(DOCKET ENTRY # 75)

BOWLER, U.S.M.J.

Pending before this court is a motion to dismiss filed by defendants Peter M. Coco ("Coco"), Frank A. Cieri ("Cieri"), and Olde Center Ventures, Inc. ("OCVI").¹ (Docket Entry # 75). Plaintiff John Feloni ("Feloni") opposes the motion. (Docket Entry # 77). After conducting a hearing on October 26, 2018, this court took the motion (Docket Entry # 75) under advisement.

PROCEDURAL BACKGROUND

Feloni filed this action on October 25, 2016. (Docket Entry # 1). In a second amended complaint, he seeks damages against defendants for "knowingly" and "purposefully" conspiring to obtain money from plaintiff "through false representations,fraud, deceit, threats, intimidation, coercion and other improper and illegal means." (Docket Entry # 73, ¶¶ 69-70, 116). The second amended complaint sets out the following claims: (1) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) ("section 1962(c)") (Count I); (2) conspiracy to violate RICO, 18 U.S.C. § 1962(d) ("section 1962(d)") (Count II); (3) violation of "Massachusetts Usury Statutes"² (Count III); (4) breach of contract (Count IV); (5) fraud (Count V); (6) intentional misrepresentation (Count VI); (7) negligent misrepresentation (Count VI);³ (8) breach of the covenant of good faith and fair dealing (Count VII); and (9) use of force to collect a debt (Count VIII).⁴ (Docket Entry # 73, pp. 9-18).

Defendants seek a dismissal under Fed. R. Civ. P. 12(b)(6) ("Rule 12(b)(6)") on the ground that Feloni's claims were adjudicated in prior litigation between the parties and are thus barred by the doctrine of res judicata, also known as claim preclusion. (Docket Entry # 75). They further argue that claim preclusion bars any new claims Feloni seeks to pursue becauseFeloni failed to raise them as compulsory counterclaims in the prior state court action pursuant to Mass. R. Civ. P. 13(a). (Docket Entry # 75). Additionally, defendants contend the applicable statutes of limitations bar all of the claims in the second amended complaint. (Docket Entry # 75).

STANDARD OF REVIEW

To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face" even if actual proof of the facts is improbable. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Miller v. Town of Wenham, 833 F.3d 46, 51 (1st Cir. 2016). The "standard is 'not akin to a "probability requirement," but it'" requires, "'more than a sheer possibility that a defendant has acted unlawfully.'" Saldivar v. Racine, 818 F.3d 14, 18 (1st Cir. 2016) (internal citations omitted); Feliciano-Hernández v. Pereira-Castillo, 663 F.3d 527, 533 (1st Cir. 2011). "[A]ll reasonable inferences" are drawn "in the pleader's favor." Sanders v. Phoenix Ins. Co., 843 F.3d 37, 42 (1st Cir. 2016). Though "a court must accept as true all of the factual allegations contained in a complaint, that doctrine is not applicable to legal conclusions." Padmanabhan v. Hulka, 308 F. Supp. 3d 484, 490 (D. Mass. 2018), (citing Ashcroft v. Iqbal, 556 U.S. 662 (2009)), appeal filed, No. 18-1301 (April 11, 2018). "In determining whether a complaint crosses theplausibility threshold, 'the reviewing Court [must] draw on its judicial experience and common sense.'" García-Catalán v. United States, 734 F.3d 100, 103 (1st Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. at 679). "Threadbare recitals of the legal elements which are supported by mere conclusory statements do not suffice to state a cause of action." Padmanabhan v. Hulka, 308 F. Supp. 3d at 490 (citing Ashcroft v. Iqbal, 556 U.S. 662); see also In re Ariad Pharms., Inc. Sec. Litig., 842 F.3d 744, 750-51 (1st Cir. 2016); Sec. and Exch. Comm'n v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010) (where factual allegations in "complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal").

"Accordingly, a complaint does not state a claim for relief when the well-pled facts fail to warrant an inference of any more than the mere possibility of misconduct." Padmanabhan v. Hulka, 308 F. Supp. 3d at 490 (citing Ashcroft v. Iqbal, 556 U.S. at 678-80); see also In re Ariad Pharms., Inc. Sec. Litig., 842 F.3d at 750). "If the facts in the complaint are sufficient to state a cause of action, a motion to dismiss the complaint must be denied." Padmanabhan v. Hulka, 308 F. Supp. 3d at 490; see Nollet v. Justices of the Trial Court of The Commonwealth of Mass., 83 F. Supp. 2d 204, 208 (D. Mass. 2000).

"Exhibits attached to the complaint are" also "properly considered part of the pleading 'for all purposes,' including Rule 12(b)(6)." Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008) (internal citations omitted). This court may also "consider matters of public record and facts susceptible to judicial notice." United States ex rel. Winkelman v. CVS Caremark Corp., 827 F.3d 201, 208 (1st Cir. 2016). "It is well-accepted that federal courts may take judicial notice of proceedings in other courts if those proceedings have relevance to the matters at hand." Kowalski v. Gagne, 914 F.2d 299, 305 (1st Cir. 1990); see, e.g., Bluetarp Fin., Inc. v. Matrix Constr. Co., Inc., 709 F.3d 72, 78 n.4 (1st Cir. 2013) (taking judicial notice of related state court cases). Accordingly, the Rule 12(b)(6) record includes the state court filings attached to defendants' supporting and supplemental memoranda.

FACTUAL BACKGROUND

I. Facts in Second Amended Complaint⁵

Faloni is a resident of Somerville, Massachusetts. (Docket Entry # 73, ¶ 1). Coco and Cieri are residents of North Andover, Massachusetts. (Docket Entry # 73, ¶¶ 2, 3). OCVI isa registered Massachusetts corporation whose sole officers and directors are Coco and Cieri. (Docket Entry # 73, ¶¶ 6, 92). OCVI's principal place of business is in Peabody, Massachusetts. (Docket Entry # 73, ¶ 4). Prior to the inception of OCVI, Coco and Cieri were "the sole officers and directors of Don Guido Realty, LLC" ("DGRT"). (Docket Entry # 73, ¶ 7). They established DGRT "to handle real estate transactions." (Docket Entry # 73, ¶ 8). DGRT's "declared business operations did not include lending money" for interest or otherwise. DGRT, Coco, and Cieri "were not registered" or approved usury lenders in Massachusetts. (Docket Entry # 73, ¶¶ 8, 9). Nonetheless, they lent money to Feloni for a number of years. (Docket Entry # 73, ¶ 10).

On September 15, 2003, Feloni borrowed $62,500 from DGRT which was due and payable in six months ("2003 DGRT loan"). (Docket Entry # 73, ¶¶ 11, 12) (Docket Entry # 73-1, pp. 2-4, 14-15). Feloni's father-in-law, John T. Miles ("Miles"), co-signed the promissory note and granted a mortgage to DGRT on his primary residence. (Docket Entry # 73, ¶ 13) (Docket Entry # 73-1, pp. 6-12). In addition, Miles and Feloni signed "'Loan Inducement Affidavits'" ("Inducement Affidavits"), which stipulate that both Miles and Feloni "waive their rights to contest the reasonableness of the loan, fees and costs . . .." (Docket Entry # 73, ¶ 15) (Docket Entry # 73-1, pp. 14-15).Further, the Inducement Affidavits state that if the loan is unpaid and no subdivision or refinancing agreements are entered into by May 9, 2004, the loan must either be repaid in full plus interest or, Miles would be "obligated . . . to transfer the . . . property to Don Guido for $1.00." (Docket Entry # 73, ¶ 16) (Docket Entry # 73-1, pp. 14-15).

"Thereafter, Coco, Cieri and [DGRT] made several other loans to [Feloni]." (Docket Entry # 73, ¶ 18). "In connection with these loans, [DGRT's] counsel" issued Feloni two checks, one to deposit and the other to cash and immediately turn over to Coco. (Docket Entry # 73, ¶ 19). The second check accounted for "'costs'" from Feloni to DGRT "which exceeded 20% of the loan amount." (Docket Entry # 73, ¶ 19). "Coco and Cieri also demanded that payments be made in cash and not checks." (Docket Entry # 73, ¶ 20).

When Feloni fell behind on loan payments, "[d]efendants began to aggressively attempt to collect the money due" via intimidation and threats. (Docket Entry # 73, ¶¶ 22, 23). Cieri and Coco reminded Feloni they were "licensed gun owners" and threatened to foreclose on Miles' home. (Docket Entry # 73, ¶¶ 23, 24). Feloni, however, managed "to effectuate a refinance of Miles' home with another lender" and pay off the 2003 DGRT loan. (Docket Entry # 73, ¶¶ 25, 26).

In late 2007, the attorney representing Cieri, Coco, and DGRT had his law license suspended due to "various illegal mortgage and lending practices" made on behalf of DGRT. (Docket Entry # 73, ¶ 27). After this suspension, DGRT was dissolved. (Docket Entry # 73, ¶ 28).

In or around 2008, defendants agreed to assist Feloni in building a new business, HOTUB, LLC ("HOTUB"). (Docket Entry # 73, ¶¶ 29, 30). Feloni, Coco, and Cieri frequently spoke over the telephone to discuss the business of HOTUB. (Docket Entry # 73, ¶ 33). During these calls, Coco and Cieri represented they had considerable financial contacts, including "a strong relationship with a banker at Lawrence Savings Bank." (Docket Entry # 73, ¶¶ 33, 34, 35). Beginning in 2008, Cieri and Coco "began lending money to the Plaintiff personally and through [OCVI]." (Docket Entry # 73, ¶ 32). From 2008 to 2010, they loaned Feloni a total of $165,000. (Docket Entry # 73, ¶¶ 36, 38).

On April 17, 2008, Coco personally loaned plaintiff $7,000 ("Coco note 1"). (Docket Entry # 73-1, p. 17) (Docket Entry # 76-8, p. 72). Coco note 1 was a zero-interest loan contingent upon payment by June 15, 2008. (Docket Entry # 76-8, ...