JDM Group, LLC v. PASSAIC VALLEY WATER COMMISSION

Not for Publication

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

JDM GROUP, LLC,

Plaintiff,

Civil Action No. 18-14028 (JMV)

v.

OPINION

PASSAIC VALLEY WATER COMMISSION,

CITY OF PATERSON, COUNTY OF

PASSAIC, and STATE OF NEW JERSEY,

Defendants.

John Michael Vazquez, U.S.D.J.

This matter concerns Plaintiff JOM Group, LLC’s unpaid water bills, which Plaintiff

characterizes as a violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”)

under 18 U.S.C. § 1962(c). Plaintiff previously raised the same subject matter in a state lawsuit,

which Plaintiff lost. For unexplained reasons, Plaintiff did not challenge the state court judgment

on appeal and instead filed the current matter. Specifically, Plaintiff brings a RICO claim against

Defendants Passaic Valley Water Commission (“PVWC”), the City of Paterson (“Paterson”), the

County of Passaic (“Passaic”) (collectively, the “Defendants”), and the State of New Jersey.!

Currently pending before the Court are three motions to dismiss Plaintiff's Complaint pursuant to

Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 9(b) brought by PVWC, Paterson, and

! The status of Defendant State of New Jersey is not clear. It does not appear that Plaintiff

requested a summons for the State. D.E. 2. It would appear that sovereign immunity under the

Eleventh Amendment would bar suit against the State.

Passaic. D.E. 9-10, 19, The Court reviewed the parties’ submissions in support and in opposition,”

and considered the motions without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R.

78.1(b). For the reasons stated below, Defendants’ motions to dismiss are GRANTED.

I. FACTUAL BACKGROUND?

Plaintiff JOM Group, LLC is the owner of commercial property located in Paterson, NJ.

Compl. 4 1. PVWC is a municipal utilities authority owned and operated by Paterson and two

other cities. fd. 2. On May 1, 2014, Plaintiff purchased property and assets out of the bankruptcy

of Corel Dye & Fishing Company.* /d. 7-8. At that time, Corel Dye owed substantial debts to

PVWC and Paterson for water and sewer charges as well as unpaid taxes. /d. at 1. Upon Plaintiff's

purchase, $1,273,927.35 was placed in an escrow account “to be used to pay any outstanding

balance for taxes, water, and sewer” for the property. /d. 8. Plaintiff claims that Paterson applied

these funds to satisfy all of its outstanding liens through 2014 and PVWC received $31,940.25

from the bankruptcy proceedings for past due water charges. Jd. {] 9-10. Although the date is not

? Plaintiff's Complaint will be referred to as “Compl.” (D.E. 1); PVWC’s brief in support of its

motion will be referred to as “PVWC Br.” (D.E. 9); Paterson’s brief in support of its motion will

be referred to as “Paterson Br.” (D.E. 10); Passaic’s brief in support of its motion will be referred

to as “Passaic Br.” (D.E. 19); Plaintiff's brief in opposition to PVWC’s motion will be referred to

as “Pl. Opp.” (D.E. 11); and PVWC’s reply brief will be referred to as “PVWC Reply” (D.E. 16).

3 The factual background is taken from Plaintiffs Complaint, D.E. 1, as well as any documents

referenced, relied on, or attached to Plaintiff's Complaint. When reviewing a motion to dismiss,

the Court accepts as true all well-pleaded facts in the complaint. Fowler v. UPMC Shadyside, 578

F.3d 203, 210 (3d Cir. 2009). Additionally, a district court may consider “exhibits attached to the

complaint and matters of public record” as well as “an undisputedly authentic document that a

defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the

document.” Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.

1993).

4 Plaintiff now leases the property to American Fabric Processors, a dyeing and finishing entity.

Id. 4,1. The current tenant of the property, American Fabric, is in the same business as Corel Dye,

so it would seem that Plaintiff may have some form of historical baseline as to the monthly water

costs. Plaintiff, however, does not provide any such information in its Complaint.

provided, at some point after purchasing the property and resuming dyeing operations, Plaintiff

“deposited $10,000.00 for future water use with PVWC to continue service while the bankruptcy

proceedings were finalized.” Jd. ¥ 12.

Plaintiff claims to not have received any water bills from PVWC for two years after

purchasing the property. /d. 9 14. Plaintiff explains that PVWC continued sending bills to the

prior owner, Corel Dye, until the beginning of July 2016, when Plaintiff received bills that “showed

tens of thousands of dollars in water arrearages on five separate accounts allegedly providing

service to the property.” Jd. 4 15, 28. Plaintiff states that it requested copies of bills for all

accounts and total calculations of water arrearages from PVWC, but “PVWC refused to provide

them.” Jd. 4 16-17. Plaintiff claims that PVWC instead provided conflicting oral estimates for

the total amount owed to continue water services and allegedly stated that Plaintiff owed an

additional $100,000. Jd. 18.° Plaintiff does not dispute that it owed some amount for water

charges, but alleges that “PVWC has failed to produce routinely maintained records to verify the

amounts.” fd. 4 20.

On October 26, 2016, PVWC cut off water services to Plaintiff's property. Jd. 21. When

Plaintiff requested billing records and cancellation notices, PVWC refused to provide them and

instead demanded $63,000 to restore water service. Jd. {9 22, 25. Additionally, Plaintiff alleges

that PVWC denied having ever received payment from Plaintiff (including the $10,000 referenced

above} and “denied and/or refused to confirm” receiving payment out of the bankruptcy

proceedings. Jd. Ff 23-24. Plaintiff claims that after continually requesting billing records from

PVWC it received “printouts from Microsoft Excel spreadsheets” on October 31, 2016 which, in

3 To this end, the Complaint appears to indicate that Plaintiff's counsel may be a fact witness. Id.

4] 25-27. Since no party raises the propriety of Plaintiffs counsel litigating this matter, the Court

declines to do so sua sponte.

Plaintiff's characterization, “Defendant PVWC falsely identified as billing records[.]” Jd. {J 25-

27, PVWC then provided Plaintiff with copies of billing statements for charges after July 2016,

but refused to provide billing records for the “alleged arrearages.” /d. 35. On various occasions

when Plaintiff offered to deposit funds with PVWC to compensate for the alleged arrearages,

Plaintiff contends that PVWC refused the offers. Za. ¥] 19, 36. Plaintiff also alleges that attempts

to meet with PVWC were unsuccessful. /d. 4 38.

On November 4, 2016, Plaintiff filed an Order to Show Cause and Civil Complaint with

the Superior Court of New Jersey, Passaic County, Chancery Division against PVWC “alleging

fraud, breach of contract, violation of the covenant of good faith and fair dealing, tortious

interference with contract, and equitable estoppel[.J’ Jd. § 39. Among other things, Plaintiff

sought to compel PVWC to restore water service to the property. Plaintiff alleges that the records

PVWC produced in response to Plaintiff's filing were false or fraudulent. Jd. {ff] 40-41, 45, 47.

The matter was assigned to the Honorable Thomas J. LaConte, Presiding Judge of

Chancery, who disclosed a potential conflict of interest with PYWC. Jd. 4 51. Both parties

consented to Judge LaConte overseeing the case. /d. § 52. Initially, the court ordered water

services restored and for PVWC to produce documentation substantiating the water charges. Id.

Plaintiff alleges that after issuing this order, “[Judge LaConte] was reluctant to order Defendant

PVWC to comply with [the court’s] orders and left Defendant PVWC to choose what it wanted to

disclose.” /d. 753. Plaintiff alleges unfairness in the state proceeding regarding discovery matters.

Id. 49 54, 56, 60-62. Yet, there was an evidentiary hearing during which at least two witness from

PVWC testified; after the hearing, PVWC submitted “hundreds of pages worth of billing □

records[.]” Jd. {f 58-60. On August 10, 2017, Judge LaConte issued a final judgment ordering

Plaintiff to pay Defendant PVWC $71,000 in water charges. Jd. § 63-64; PVWC Br. Ex. E.

Plaintiff complains that this judgment was issued “in spite of the fact that Defendant PVWC never

filed a counterclaim.” Jd.

Following the court’s order, Plaintiff moved for reconsideration, but the motion was

denied. /d. { 65. Plaintiff alleges that PVWC later demanded amounts in excess of the court’s

order and threatened to shut off water services, which prompted Plaintiff to file a motion to vacate

judgment. Jd. J] 66-67. Plaintiff claims that in PVWC’s opposition to its motion, PVWC brought

forth documentation it had previously withheld which presented an “erroneous calculation” of

what Plaintiff owed. Jd. 99 69, 74. Plaintiff alleges that “PVWC deliberately presented false,

fraudulent, and misleading documentation to the [cJourt.” /d. 75-76. Judge LaConte denied

Plaintiff's motion. /d. { 80.

Plaintiff claims that “[t]he [c]ourt’s Final Order did not specifically dismiss Plaintiff's

Complaint, effectively leaving an incomplete record that could already be described as tortured.”

Id. 481. Plaintiff alleges that the Superior Court’s decisions were “the very definition of arbitrary

and capricious” and meet “the definition of extrajudicial.” Jd. { 82. There is no indication that

Plaintiff appealed Judge LaConte’s final judgment to the Appellate Division.

Il. PROCEDURAL HISTORY

On September 19, 2018, Plaintiff filed its Complaint against PVWC, Paterson, and Passaic,

alleging violations of RICO, 18 U.S.C. § 1962(c). Compl. at 15. Specifically, Plaintiff alleges

that PVWC “used the U.S. Postal Service to mail demand letters for alleged past due water charges

to Plaintiff that it knows or should have known were invalid or non-existent charges, which

constitutes mail fraud pursuant to 18 U.S.C. § 1341.” Compl. 7 85. Plaintiff claims that PYWC

and Paterson “are engaged in a scheme to extort money from water customers using false billing”

and “to embezzle bankruptcy proceedings [sic] and have falsified records to hide it.” Jd. J 87-

88. Further, Plaintiff alleges that Passaic “conspired or otherwise exerted political pressure to

validate the above reference schemes through extrajudicial acts, giving said demands the color of

law.” Jd. 489. Plaintiff asserts that all three Defendants “agreed to and did conduct and participate

in the conduct of the enterprise’s affairs through a pattern of racketeering activity and for the

unlawful purpose of defrauding Plaintiff.” Jd. | 90. Plaintiff claims that Defendants’ acts of

“extortion, fraud, mail fraud, official misconduct, abuse of office and perjury,” injured Plaintiff in

its business and property. /d. 91, 94.

On January 25, 2019, PVWC filed the first current motion to dismiss. D.E. 9. On that

same date, Paterson filed its motion. D.E. 10. Plaintiff filed opposition, D.E. 11, to which PVWC

replied, D.E. 16. On March 18, 2019, Passaic filed its motion. D.E. 19.

Ii. LEGAL STANDARDS

All three Defendants bring their motions to dismiss pursuant to Rules 12(b)(1) and

12(b)(6). PVWC and Passaic also bring their motions to dismiss pursuant to Rule 9(b). Defendants

bring their 12(b)(1) motion for lack of subject matter jurisdiction under the Reoker-Feldman

doctrine. PVWC Br. at 4; Paterson Br. at 8; Passaic Br. at 8. Therefore, the Court will address the

standards for motions pursuant to 12(b)(1), 12(b)(6), and 9(b).

Rule 12(b)(1)

In deciding a Rule 12(b)(1) motion for lack of subject-matter jurisdiction, a court must first

determine whether the party presents a facial or factual attack because the distinction determines

how the pleading is reviewed.® A facial attack “contests the sufficiency of the complaint because

of a defect on its face,” whereas a factual attack “asserts that the factual underpinnings of the basis

“6 This Court also has an independent obligation to establish that it has subject-matter jurisdiction.

Morel v. INS, 144 F.3d 248, 251 (Gd Cir. 1998),

for jurisdiction fails to comport with the jurisdictional prerequisites.” E/beco Inc. v. Nat'l Ret.

Fund, 128 F. Supp. 3d 849, 854 (E.D. Pa. 2015) (quoting Moore v. Angie's List, Inc., 118 F. Supp.

3d 802, 806 (E.D. Pa. 2015)), When a party moves to dismiss prior to answering the complaint,

as is the case here, the motion is generally considered a facial attack. Constitution Party of Pa. v.

Aichele, 757 F.3d 347, 358 (3d Cir. 2014).

For a facial attack, “the Court must consider the allegations of the complaint as true,” much

like a Rule 12(b)(6) motion to dismiss. Bd. of Trs. of Trucking Emps of N. Jersey Welfare Fund,

Ine. v. Caliber Auto Transfer, Inc., No. 09-6447, 2010 WL 2521091, at *8 (D.N.J. June 11, 2010)

(quoting Petruska v. Gannon Univ,, 462 F.3d 294, 302 (3d Cir. 2006)). The burden is on the

Plaintiff to prove the Court has jurisdiction. Jd. (citing Petruska, 462 F.3d at 302).

Rule 12(b)(6)

Rule 12(b)(6) permits a court to dismiss a complaint that fails “to state a claim upon which

relief can be granted[.]}” For a complaint to survive dismissal under the rule, it must contain

sufficient factual matter to state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 US.

662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is

facially plausible “when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Jd. Further, a

plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery will uncover

proof of her claims.” Connelly v. Lane Const. Corp., 809 F.3d 780, 789 (3d Cir. 2016).’

In evaluating the sufficiency of a complaint, district courts must separate the factual and

legal elements, Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009). Restatements

of the elements of a claim are legal conclusions, and therefore, not entitled to a presumption of

7 Plaintiff cites the wrong standard of review. PI. Opp. at 6. Plaintiff relies on the pre-

Twombly/Igbal notice standard. Id.

truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court, however,

“must accept all of the complaint’s well-pleaded facts as true.” Fowler, 578 F.3d at 210. Even if

plausibly pled, however, a complaint will not withstand a motion to dismiss if the facts alleged do

not state “a legally cognizable cause of action.” Turner v. J.P. Morgan Chase & Co., No. 14-7148,

2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).

Rule 9(b)

Federal Rule of Civil Procedure 9(b) imposes additional pleading requirements.

“Independent of the standard applicable to Rule 12(b)(6) motions, Rule 9(b) imposes a heightened

pleading requirement of factual particularity with respect to allegations of fraud.” /n re Rockefeller

Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002). Thus, pursuant to Rule 9(b), when

“alleging fraud or mistake, a party must state with particularity the circumstances constituting

fraud or mistake . . . [mJalice, intent, knowledge, and other conditions of a person’s mind may be

alleged generally.” Fed. R. Civ. P. 9(b). A party alleging fraud must therefore support its

allegations with factual details such as “the who, what, when, where and how of the events at

issue.” U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294, 307 (3d

Cir. 2016). Accordingly, “[t]o satisfy the particularity standard, ‘the plaintiff must plead or allege

the date, time and place of the alleged fraud or otherwise inject precision or some measure of

substantiation into a fraud allegation.”” Feingold v. Graff, 516 F. App’x 223, 226 (3d Cir. 2013)

(citing Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007)). This heightened pleading

standard is designed to “ensure that defendants are placed on notice of the precise misconduct with

which they are charged, and to safeguard defendants against spurious charges of fraud.”

Crafimatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 645 (3d Cir. 1989) (internal quotation marks

omitted).

IV. ANALYSIS

Defendants argue that Plaintiff fails to state any viable claim for relief against Defendants

pursuant to 12(b)(6). PWWC Br. at 10-15; Paterson Br. at 6-8; Passaic Br. at 3-7. Defendants

further assert that this Court lacks subject-matter jurisdiction based on the Rooker-Feldman

doctrine. PVWC Br. at 4; Paterson Br. at 8; Passaic Br. at 8. The Court addresses each in turn.

a. Failure to State a Claim Under 12(b)(6)

Defendants argue that Plaintiff's Complaint fails to properly plead a cause of action based

on the Third Circuit’s ruling in Genty v. Resolution Trust Corp., 937 F.2d 899, 914 (3d Cir. 1991).

PVWC Br. at 10; Paterson Br. at 7; Passaic Br. at 7. The Genty court ruled that RICO claims

cannot be maintained against municipalities:

We thus hold that a civil claim brought under section 1964(c) of the

RICO Act, with its mandatory award of treble damages which are

punitive in character, cannot be maintained against a municipal

corporation, In so doing, we iterate that we perceive no intention of

Congress to abrogate the long-established and salutary principle of

common law prohibiting punitive damages against municipalities.

Genty, 937 F.2d at 914, Defendants allege that since each Defendant falls under the category of

municipality or municipal entity for Genty’s purposes, Plaintiff is barred from asserting a RICO

claim against Defendants as a matter of law. PVWC Br. at 10-12; Paterson Br. at 7; Passaic Br. at

7. In opposition, Plaintiff contends that “the Court in Genty was only concerned with the policy

issue of whether a municipality could be held liable for treble damages, and preserved the

possibility of bringing a RICO action against a municipal entity engaged in RICO activities.” PI.

Opp. at 7. Therefore, Plaintiff argues that Genty does not bar Plaintiff from bringing a RICO claim

against Defendants.

The Court finds that under Genty, a RICO claim cannot be maintained against Defendants.

Like JDM, the plaintiff in Genty sought to separate the treble damages from the RICO claim at

large. The Genty plaintiff argued that “a district court could in its discretion award only

compensatory damages against a municipality under section 1964(c),” thereby making it possible

for RICO liability to be imposed upon municipalities. Genty, 937 F.2d at 914. The Third Circuit

disagreed. The Circuit explained that “(i]t is clear that trial courts and juries are at no liberty under

RICO to award any amount less than treble damages. The plain language of that statute instructs

that injured persons ‘shall recover’ treble damages and costs and attorneys fees.” Jd. The court in

Genty observed that “the prevailing punitive nature of section 1964(c)’s compulsory award of

treble damages convinces us that Congress, in keeping with the common law, did not intend to

subject municipal corporations to RICO liability.” /d. As Genty represents binding precedent, the

Court cannot bifurcate treble damages from the RICO claim, as urged by Plaintiff. Genty bars

Plaintiff from asserting RICO claims against all three Defendants. See also Kadonsky v. New

Jersey, 88 Fed. Appx. 81, 84-85 (3d Cir. 2006) (affirming the District Court’s ruling that RICO

claims “against Somerset and Hunterdon counties ... are barred because municipal entities are

immune from suit under applicable federal and state law.”) (citing Genty, 937 F.2d at 914)

In addition to Genty, Defendants argue that Plaintiff fails to plausibly allege a claim under

the federal RICO statute. PVWC Br. at 12; Paterson Br. at 6; Passaic Br. at 3. To bring a federal

civil RICO claim in accordance with 18 U.S.C. § 1962, a plaintiff must allege: “(1) the conducting

of, (2) an enterprise, (3) through a pattern, (4) of racketeering activity.” Gunter v. Ridgewood

Energy Corp., 32 F. Supp. 2d 166, 173 (D.N.J. 1998). To establish a “pattern of racketeering,” a

plaintiff must allege ‘tat least two predicate acts of racketeering that occurred within ten years of

each other.” Slimm v. Bank of Am. Corp., 2013 WL 1867035, at *20 (D.N.J. May 2, 2013).

Plaintiff states that the relevant predicate acts for its RICO claim are “extortion, fraud, mail fraud,

10

official misconduct, abuse of office, and perjury.” Compl. { 92. Plaintiff's allegations of mai! and

wire fraud are subject to the heightened pleading standard of Rule 9(b). Fed. R. Civ. P. 9(b).

The Court also finds that Plaintiff's factual allegations fall short of the requisite pleading

standard. Plaintiff first fails to plead mail and wire fraud with the particularity required by Rule

9(b). To properly plead mail or wire fraud, plaintiffs must “plead with particularity the

‘circumstances’ of the alleged fraud in order to place the defendants on notice of the precise

misconduct with which they are charged.” Seville Indus. Mach, Corp. v. Southmost Mach, Corp.,

742 F.2d 786, 791 (3d Cir. 1984). Plaintiffs may plead the specific misconduct along with the

“date, place, or time,” or plaintiffs may “use alternative means of injecting precision and some

measure of substantiation into their allegations of fraud.” /d. Plaintiff alleges that “Defendant

PVWC used the U.S. Postal Service to mail demand letters for alleged past due water charges to

Plaintiff that it knows or should have known were invalid or non-existent charges, which

constitutes mail fraud pursuant to 18 U.S.C. § 1341.” Compl. 9 85. The allegation fails to include

specific dates, places, or times or inject precision or any measure of substantiation into the claim

against PVWC.

Plaintiff also alleges that “Defendant Paterson knew or should have known of the

bankruptcy proceedings and knew of Defendant PVWC’s attempts to recover money it was not

entitled to” and that both Paterson and PVWC “engaged in a scheme to extort money from water

customers.” Jd. § 86-87. The only evidence that Plaintiff appears to offer to support these claims

against Paterson is that “Paterson holds a controlling stake” in PVWC. Jd. Again, the allegations

fall far short of the required particularity and are, in essence, entirely conclusory.

Plaintiff further pleads that Passaic “conspired with or otherwise exerted political pressure

to validate the above referenced schemes through extrajudicial acts, giving said demands the color

11

of law.” Jd. 89. These allegations are also woefully inadequate. Plaintiff fails to provide any

specifics as to the alleged conspiracy, such as dates or particulars as to the unlawful agreement.

Similarly, Plaintiff provides no factual support to explain its claim of “political pressure.” Further,

Plaintiffs do not describe the alleged “extrajudicial” acts or when such acts occurred.

Of note, in its opposition, Plaintiff claims that “any defects in Plaintiff's pleading can be

cured by amendment to the Complaint.” Pl. Opp. at 7. Plaintiff states that if given leave to amend,

Plaintiff could “easily” amend the Complaint to “add individual officers and employees of these

municipal entities as individual defendants” in the form of John and Jane Doe defendants. /d. at

9. Plaintiff appears to state that it could bring such claims under 42 U.S.C. § 1983. /d. at 8. The

argument is perplexing because Plaintiff does not assert a Section 1983 claim in its Complaint.

Pursuant to Gentry, Plaintiff will not be able to replead its RICO claims as to Defendants.

However, if Plaintiff believes that it can adequately assert a Section 1983 count or counts, the

Court will give Plaintiff leave to file an amended complaint subject to the following analysis.

b. 12(b)(1)

“The Rooker~Feldman doctrine precludes lower federal courts from exercising appellate

jurisdiction over final state-court judgments because such appellate jurisdiction rests solely with

the United States Supreme Court.” Jn re Madera, 586 F.3d 228, 232 (3d Cir. 2009) (quoting Lance

vy. Dennis, 546 U.S. 459, 463 (2006)); see also Williams v, BASF Catalysts LLC, 765 F.3d 305,

315 (3d Cir. 2014). The Rooker-Feldman doctrine limits the subject-matter jurisdiction of this

Court, and therefore is considered an issue of subject-matter jurisdiction under Rule 12(b)(1). See

Gary v. Braddock Cemetery, 517 F.3d 195 (3d Cir.2008) (affirming 12(b)(1) dismissal based on

Rooker-Feldman doctrine).

12

The Supreme Court addressed the scope of the Rooker-Feldman doctrine in Exxon Mobil

Corp. v. Saudi Basie Indus. Corp., 544 U.S. 280 (2005), and Lance v. Dennis, 546 U.S. 459 (2006).

While the Supreme Court narrowed the scope of the doctrine in both cases, the Court made clear

that the doctrine still applies to “cases brought by state-court losers complaining of injuries caused

by state-court judgments rendered before the district court proceedings commenced and inviting

district court review and rejection of those judgments.” Lance, 546 U.S. at 464 (quoting Exxon

Mobil, 544 U.S. at 284). The Third Circuit previously relied on a different test to determine

whether the Rooker-Feldman doctrine applied to a subsequent federal suit. However, in light of

Lance and Exxon Mobil, the Third Circuit concluded that “‘caution is now appropriate in relying

on our pre-Exxon formulation of the Rooker-Feldman doctrine,’ which focused on whether the

state and federal suits were ‘inextricably intertwined.’” Great W. Mining & Mineral Co. v. Fox

Rothschild LLP, 615 F.3d 159, 169 (3d Cir. 2010) (quoting Gary v. Braddock Cemetary, 517 F.3d

195, 200 n.5 (3d Cir. 2008)).

The Third Circuit has ruled that the doctrine applies when “(1) the federal plaintiff Jost in

state court; (2) the plaintiff ‘complain[s] of injuries caused by [the] state-court judgments’; (3)

those judgments were rendered before the federal suit was filed; and (4) the plaintiff is inviting the

district court to review and reject the state judgments.” Great W. Mining & Mineral Co. v. Fox

Rothschild LLP, 615 F.3d 159, 166 (3d Cir. 2010) (citing Exxon Mobil Corp. v. Saudi Basic Indus.

Corp,, 544 U.S, 280, 284 (2005)). Defendants argue that all four elements are met, so Plaintiff's

Complaint must be dismissed. PVWC Br. at 8-9; Paterson Br. at 9; Passaic Br. at 9-10. First,

Plaintiff received an adverse final judgment in the Superior Court of Passaic County on August

10, 2017. PVWC Br. at 7. Second, Plaintiff complains of injuries caused by the state court

judgment. /d. at 8. Third, the adverse state court judgment was rendered before Plaintiff filed in

13

this Court. Paterson Br. at 9. Fourth, Defendants claim that by alleging that the state court’s

judgment was “incomplete,” “arbitrary and capricious,” and “extrajudicial,” Plaintiff is inviting

the district court to review the state court’s judgment. PVWC Br. at 9. Defendants also note that

Plaintiff did not indicate that it appealed the state court judgment. Passaic Br. at 10. Defendants

allege that “Plaintiff has essentially filed an appeal from the state court action” in this district court.

PVWC Br. at 7.

Here, Plaintiff undoubtedly lost in state court and Judge LaConte’s final judgment was

clearly entered before the current matter was filed, satisfying the first and third elements.

Generally, however, “[t]he second and fourth requirements are the key to determining whether a

federal suit presents an independent, non-barred claim.” Great W. Mining, 615 F.3d at 166. The

Third Circuit advises that “[t]he second requirement—that a plaintiff must be complaining of

injuries caused by a state-court judgment—may also be thought of as an inquiry into the source of

the plaintiff's injury.” Jd. at 166 (citing Turner v. Crawford Square Apartments HE, L.P., 449 F.3d

542, 547 (3d Cir.2006). “A useful guidepost is the timing of the injury, that is, whether the injury

complained of in federal court existed prior to the state-court proceedings and thus could not have

been ‘caused by’ those proceedings.” Jd. at 167, The Third Circuit has explained that the fourth

requirement is “closely related” to the second requirement, id. at 168, but that the fourth

requirement is aimed at plaintiffs asking a federal district court to engage in “appellate review of

state-court decisions or a review of the proceedings already conducted by the lower tribunal to

determine whether it reached its result in accordance with law.” /d. (internal citations and

quotations omitted).

Piaintiff claims that the “references to proceedings in state court are not intended as a

challenge to that decision, but as evidence that certain employees of the named defendants may be

14

engaged by intention or omission in a scheme to defraud Plaintiff, other customers of Passaic

Valley Water Commission, and Passaic County taxpayers.” Pl. Opp. at 9. Plaintiff also argues

that it is not attempting to appeal or inviting this Court to review and reject the state court

judgment. Jd. The Court finds Plaintiff's arguments to be at odds with its allegations in the

Complaint; the state court proceedings are featured prominently (and routinely attacked) in the

Complaint. Plaintiff is clearly attempting to overturn Judge LaConte’s decision. Yet, it is not

clear that Plaintiff is on/y attempting to reverse the state court final judgment in the current suit.

To the extent Plaintiff is solely attempting to get relief from the state court final judgment,

Rooker-Feldman clearly applies. Plaintiff unmistakably complains of alleged injuries from Judge

LaConte’s judgment and is inviting this Court to review and reject the state court judgment,

satisfying both the second and fourth elements. However, Plaintiff's Complaint is not drafted in

such a manner that this Court can definitively determine that Plaintiff is only complaining of the

state court final judgment. Of course, as to issues that were litigated (or that could have been

litigated in state court as transactionally related), the law of preclusion could nevertheless bar

Plaintiff from raising such issues in this Court regardless of Rooker-Feldman and regardless of

whether Plaintiff referenced the state court action.

Aj federal court, in determining the [preclusive] effect of a state court proceeding, should apply

the law of the state where the . . . proceeding took place{.]” Taylor v. S.T. Good Ins., Inc., No. 10-

4258, 2012 WL 83650, at *3 (D.N.J. Jan. 11, 2012) (quoting Anela v. City of Wildwood, 790 F.2d

1063, 1068 (3d Cir. 1987)). Asa result, the Court would apply the preclusion law of New Jersey.

“The entire controversy doctrine is essentially New Jersey's specific, and idiosyncratic, application

of traditional res judicata principles.” Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883,

886 (3d Cir. 1997). Similar to res judicata, the entire controversy doctrine “extinguishes any

subsequent federal-court claim that could have been joined but was not raised in the prior state

action.” Siljee v. Atl. Stewardship Bank, No. 15-1762, 2016 WL 2770806, at *7 (D.N.J. May 12,

2016). Moreover, as to issues that were actually litigated, decided, and necessary to the state court

final judgment, issue preclusion may apply. See Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 521

(2006); Ivashenko v. Katelyn Court Co., 401 N.J. Super. 99, 109 (App. Div. 2008).

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To the extent Plaintiff is seeking relief from the state court final judgment, Rooker-

Feldman applies, and this Court does not have jurisdiction. However, because the Court cannot

determine with certainty that Plaintiff is only seeking to have this Court review Judge LaConte’s

judgment, the Court does not find that Rooker-Feldman is a necessary bar to a future amended

complaint by Plaintiff?

V. CONCLUSION

For the reasons stated above, the motions to dismiss filed by Defendants, D.E. 9-10, 19,

are granted. Any attempt at amending RICO claims against the current Defendants would be futile.

Moreover, any attempt to have this Court review and reverse the state court final judgment is

beyond this Court’s jurisdiction. However, because this is Plaintiff's initial pleading, the Court

will give Plaintiff one additional opportunity, particularly because Plaintiff alluded to a different

cause of action in its opposition brief. The Complaint is dismissed without prejudice. Plaintiff

has thirty (30) days to file an amended complaint, if it so chooses, consistent with this Opinion. If

Plaintiff fails to file an amended complaint within that time, this matter will be dismissed with

prejudice. An appropriate Order accompanies this Opinion.

Dated: December 4, 2019

“Noe LeeNc Z

John Michael Vazqueg, DJ .

To be clear, Rooker-Feldman may bar a future, amended complaint. The Court is merely

indicating that it cannot say at this time that Rooker-Feldman will definitively do so.

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