McNeil v. Hugel

• Court: District Court, D. New Hampshire
• Decided: March 31, 1995
• Docket: CV-93-462-JD
• Status: Published

Opinion

McNeil v. Hugel CV-93-462-JD 03/31/95 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Thomas R. McNeil

v. Civil No. 93-462-JD

Max Hugel, et al.

O R D E R

The plaintiff, Thomas R. McNeil, brought a multi-count

action against defendants Max Hugel; Joseph A. Millimet, Esg.;

Matthias J. Reynolds, Esg.; Devine, Millimet, Stahl & Branch

("DMSB"); Asbury Park Press; Carol Napolitano; and Paul J.

Perito, Esg.1 Currently before the court are motions to dismiss

filed by defendant Max Hugel (document no. 56), defendants DMSB

and Joseph Millimet and Matthias Reynolds (document no. 57), and

defendant Paul Perito (document no. 62). Also before the court

is defendant Perito's motion for a permanent injunction (document

no. 63) . Jurisdiction is grounded upon 28 U.S.C. § 1332 (a) (1) .

Background2

This action arises out of a long and acrimonious relation­

ship between McNeil and defendant Hugel. The facts as alleged by

defendants Asbury Park Press and Carol Napolitano were subseguently dismissed.

2The facts of this case were originally set forth in the court's order dated May 16, 1994. McNeil follow. From 1973 through 1975 Hugel, then president of

Brother International Corporation ("Brother International"), was

involved in a business relationship with McNeil and McNeil's

brother. McNeil's wholly owned securities firm, McNeil

Securities Corporation, was the principal firm trading Brother

International stock. Amended Complaint, 5 20, Exhibit 1.

According to McNeil, Hugel participated in several illegal

business acts, including providing the McNeil brothers with

inside information on Brother International and funnelling funds

to McNeil Securities. Amended Complaint, 5 20; Amended

Complaint, Exhibit 1. As a result, Hugel became extremely

wealthy, made large campaign donations to Republican candidates

and was appointed to the CIA, eventually becoming Director of

Covert Operations in May 1981.

McNeil, who claims he was "appalled" that Hugel had been

appointed to such a sensitive position, went first to the White

House and then to the Washington Post to report on Hugel's stock

fraud and provide secretly made recordings of many of his

conversations with Hugel. The Post published McNeil's account of

the stock fraud on July 14, 1981, stating that Hugel both denied

any wrongdoing and accused the McNeil brothers of threatening him

with blackmail. Amended Complaint, 5 23, Exhibit 1. Following

publication of the Post story, Hugel was forced to resign from

2 the CIA. McNeil, who had illegally taken funds "to hide from the

wrath of those elements of the CIA who had covered up [Hugel's]

criminal background prior to his appointment to higher office,"

fled with his brother shortly before the Post published the

article. Amended Complaint, 5 24.3

In 1982, Hugel filed a libel action against the McNeil

brothers. On February 24, 1983, Hugel obtained a default

judgment. The McNeils unsuccessfully appealed. See generally

Hugel, 886 F.2d at 1-3.

In August 1987, Hugel gave a series of interviews from

Salem, New Hampshire to defendant Napolitano, an Asbury Park

Press reporter. McNeil asserts that these interviews were an

overt act in furtherance of a conspiracy with Millimet, Reynolds,

Perito and DMSB "to make false and malicious accusations against

[him] to the Asbury Park Press." Amended Complaint, 5 26.

McNeil claims Hugel made false and malicious accusations when he

told the Asbury Park Press that McNeil had "tried to blackmail

him," that McNeil had libeled him in 1981, that he had been

"used" by McNeil, that McNeil had "forged a check and cashed it,"

3"In May 1987 [McNeil and his brother] surfaced -- with the help of California law enforcement officers -- and faced criminal charges of conspiracy to defraud the U.S. Government and interstate transportation of stolen goods. The McNeils pleaded guilty and were sentenced to prison terms for their crimes." Hugel v. McNeil, 886 F.2d 1, 3 (1st Cir. 1989), cert, denied, 494 U.S. 1079 (1990) .

3 that McNeil was involved in a "communist conspiracy" and that the

McNeils were hiding in Cuba. Amended Complaint, 55 28, 29, 30,

33, 34.

The Asbury Park Press published the front page story on

August 30, 1987. The paper was widely distributed in New Jersey,

New York City and other communities where McNeil had many

friends, relatives, clients and former business associates.

Amended Complaint 5 39. McNeil did not discover the existence of

the article until December 1990 and "did not learn of the causal

relationship of said injury until early summer of 1992, . . .

when [he] learned that readers of the libelous article believed

defendant Hugels [sic] lies . . . ." Amended Complaint, 5 13.

On May 16, 1994, the court granted in part motions to

dismiss filed by Hugel, Millimet, Reynolds, DMSB and Perito.4

The court dismissed all claims for libel and slander for failure

to be filed within the three-year period prescribed by RSA §

508:4. The court also found that McNeil failed to articulate his

conspiracy claim sufficiently to enable the defendants to prepare

adeguate responses and, pursuant to Rule 15(a), Fed. R. Civ. P.,

allowed him an opportunity to file a second amended complaint

stating clearly and concisely the specific conduct constituting

4The court also dismissed defendant Asbury Park Press for lack of personal jurisdiction.

4 the conspiracy. In response, McNeil filed an amended complaint

which is fifty-six pages in length and contains eleven separate

causes of action. Defendants Hugel, Millimet, Reynolds, DMSB and

Perito have moved to dismiss the second amended complaint on

various grounds.

Discussion

McNeil has attempted to allege several substantive non­

conspiracy counts. See Second Amended Complaint at Count I

(defamation and slander), Count II (defamation and libel), count

III (negligence). Count IV ("fraud on the court"). Count VI

(blackmail and extortion). Count VII ("misrepresentation and

nondisclosure and deceit"). Count VIII (invasion of privacy).

Count IX ("misuse of legal procedure, malicious prosecution,

wrongful civil proceedings and abuse of process") and Count X

(fraud). However, in its May 16, 1994, order, the court granted

McNeil leave to amend only his conspiracy claim. McNeil has not

sought the court's permission to set forth new substantive

counts. For this reason, these counts are dismissed to the

extent that they do not allege conspiracy claims. The court

5 therefore need not outline the several additional deficiencies

inherent in these allegations.5

In the preamble to the Second Amended Complaint McNeil

states,

In response to the Court noting at page 25 of the ORDER dated May 16, 1994, that "it is not evident McNeil is alleging that the slander and libel constitute the underlying tort" that is correct. The underlying tort was the conspiracy to defraud plaintiff by committing a fraud on the Court in the underlying Hugel V. McNeil litigation (See: Hugel V. McNeil, C. 82-615-L and Hugel V. McNeil, 886 F.2d, 1, 1989) or, in the alternative, to commit a fraud on the Court in order to defraud plaintiff.

Second Amended Complaint at 2. McNeil further states, "The

fraud upon the court was the essential basis for the rest of the

conspiracy to succeed and go forward and the other objectives in

addition to defrauding plaintiff be achieved." I d . at 3.

Accordingly, nothwithstanding McNeil's labeling of his claims,

the court treats Counts I, II, IV, V, VI and X as alleging the

same claim for conspiracy based on the alleged fraud on the court

identified in the preamble.

5The court does note, however, that Count III of the Second Amended Complaint, alleging a claim for negligence against former defendant Carol Napolitano, is immaterial to the plaintiff's action because it contains no claims against the current defendants. Therefore, even if Count III had not been filed without leave to amend, the court would have ordered it stricken from the Second Amended Complaint pursuant to Fed. R. Civ. P. 12(f) ("upon the court's own initiative at any time, the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter").

6 The defendants seek dismissal of the complaint on several

grounds, including McNeil's failure to state a claim for which

relief may be granted and res iudicata principles. Because the

court agrees that McNeil has failed to allege adeguately a

conspiracy, the court grants the motions to dismiss.

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) is one of

limited inguiry, focusing not on "whether a plaintiff will

ultimately prevail but whether the claimant is entitled to offer

evidence to support the claims." Scheuer v. Rhodes, 416 U.S.

232, 236 (1974). Accordingly, the court must take the factual

averments contained in the complaint as true, "indulging every

reasonable inference helpful to the plaintiff's cause." Garita

Hotel Ltd. Partnership v. Ponce Fed. Bank, 958 F.2d 15, 17 (1st

Cir. 1992); see also Dartmouth Review v. Dartmouth College, 889

F.2d 13, 16 (1st Cir. 1989). Great specificity is not reguired

to survive a Rule 12(b)(6) motion. "[I]t is enough for a

plaintiff to sketch an actionable claim by means of 'a

generalized statement of facts from which the defendant will be

able to frame a responsive pleading.'" Garita, 958 F.2d at 17

(guoting 5A Charles A. Wright & Arthur R. Miller, Federal

Practice and Procedure § 1357 (1990)). In so doing, however, a

plaintiff cannot rely on "bald assertions, unsupportable con­

clusions, and 'opprobrious epithets.1" Chonqris v. Board of

7 Appeals, 811 F.2d 36, 37 (1st Cir.) (quoting Snowden v. Hughes,

321 U.S. 1 , 10 (1944)), cert, denied, 483 U.S. 1021 (1987). In

the end, the court may grant a motion to dismiss under Rule

12(b)(6) "'only if it clearly appears, according to the facts

alleged, that the plaintiff cannot recover on any viable

theory.1" Garita, 958 F.2d at 17 (quoting Correa-Martinez v.

Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir. 1990)).

I. Counts I, II, IV, V, VI, VII and X: Conspiracy to Commit

Fraud

Defendants Hugel, Millimet, Reynolds and DMSB contend

these counts should be dismissed because (1) the plaintiff has

failed to allege any factual basis to support the essential

elements of fraud or conspiracy to commit fraud; (2) the

plaintiff has failed to allege fraud with sufficient par­

ticularity to satisfy Rule 9(b), Fed. R. Civ. P., and (3) the

claims alleged therein are barred by the applicable statute of

limitations.

New Hampshire does not recognize a civil action based on

conspiracy alone. Town of Hooksett Sch. Dist. v. W. R. Grace,

617 F. Supp. 126, 133 (D.N.H. 1984). "For a civil conspiracy to

exist, there must be an underlying tort which the alleged conspirators agreed to commit." University Sv s . of New Hampshire

v. U.S. Gypsum Co., 756 F. Supp. 640, 652 (D.N.H. 1991).

Under New Hampshire law, "[t]o establish fraud, the plaintiff

must prove that the defendant made a fraudulent misrepresentation

for the purpose or with the intention of causing the plaintiff to

act upon it. While the plaintiff need not establish fraud in his

pleadings, in order to withstand a motion to dismiss the

plaintiff must specify the essential details of the fraud, and

specifically allege the facts of the defendant's fraudulent

actions." Proctor v. Bank of New Hampshire., 123 N.H. 395, 399,

464 A.2d 263, 265 (1983) (citation omitted).

The court finds that Counts I, II, IV, V, VI, VII and X fail

to state a claim for fraud under New Hampshire law as to any

defendant. Specifically, the court has examined these counts and

has found no allegation that any of the defendants made any

representation for the purpose or with the intention of causing

the plaintiff to act upon it. Further, because the plaintiff has

failed to state a claim for the underlying tort of fraud, the

court finds the plaintiff has failed to state a claim for

conspiracy as to any defendant. II. Count XI: Conspiracy to Violate Constitutional Rights

In Count XI McNeil claims the defendants conspired to

deprive him of (1) his right to due process under the Fifth and

Fourteenth Amendments, and (2) his First Amendment right to

petition the government. Second Amended Complaint, 5 106.

The due process clause of the Fourteenth Amendment does not

address private conduct "however discriminatory or wrongful."

Jackson v. Metropolitan Edison Co . , 419 U.S. 345, 349 (1974)

(guoting Shelley v. Kraemer, 334 U.S. 1 (1948) ) . Where

"individual-state relationships" may be involved in otherwise

private conduct, "the dispositive guestion . . . is not whether

any single fact or relationship presents a sufficient degree of

state involvement, but rather whether the aggregate of all

relevant factors compels a finding of state responsibility."

Jackson, 419 U.S. at 360.

The Fifth Amendment applies to and restricts "only the

Federal Government and not private persons." Public Utilities

Comm'n v. Poliak, 343 U.S. 451, 461 (1952).

In addition, "a conspiracy to violate First Amendment rights

is not made out without proof of state involvement." United

Broth, of Carpenters & Joiners v. Scott, 463 U.S. 825, 832

(1983) .

10 Although McNeil alleges that the defendants engaged in

conspiratorial conduct involving the misuse of certain judicial

processes, the court finds that he has alleged no facts

indicating either state or federal involvement in, or state or

federal responsibility for, such conduct. Further, McNeil has

failed to allege that the defendants acted in any manner other

than as purely private persons. Therefore, the court finds that

Count XI fails to state a claim for conspiracy to violate the

plaintiff's rights under the First, Fifth or Fourteenth

Amendments.

Conclusion

The plaintiff has failed to assert adeguately a conspiracy

claim against the defendants. The defendants' motions to dismiss

(documents nos. 56, 57 and 62) are granted. Defendant Perito's

motion for a permanent injunction (document no. 63) is denied.

The clerk of court shall close the case.

SO ORDERED.

Joseph A. DiClerico, Jr. Chief Judge March 31, 1995

cc: Thomas R. McNeil Gary M. Burt, Esguire James R. Muirhead, Esguire Andrew L. Sandler, Esguire