

               UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT
                                        

No. 96-2082

                     ANNETTE B. DeMAURO,

                    Plaintiff, Appellant,

                             v.

    JOSEPH M. DeMAURO, EDWARD MARTIN, DeMAURO CO., INC.,
NICHOLAS DeMAURO, TRI-AREA DEVELOPMENT CO., INC. and JOAN MARTIN,

                   Defendants, Appellees.

                                        

        APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. Reginald C. Lindsay, U.S. District Judge]

                                        

                           Before

                    Boudin, Circuit Judge,

                Bownes, Senior Circuit Judge,

                  and Lynch, Circuit Judge.

                                        

S. James Boumil for appellant.
Kathleen M.  Morrissey  with  whom  Bernard  A. Dwork,  Roger  T.
Manwaring, Barron &amp; Stadfeld, P.C., Richard L. Fox and Carragher &amp; Fox
were on brief for appellees Edward Martin, DeMauro Co., Inc., Nicholas
DeMauro, Tri-Area Development Co., Inc. and Joan Martin.

                                        

                        June 11, 1997
                                        

     BOUDIN,  Circuit  Judge.   In  this  case,  one  of  the

participants in  a  pending divorce  action has  invoked  the

federal racketeering statute to challenge asset transfers  by

her spouse.   The district court responded by dismissing  the

complaint without prejudice  on abstention grounds.   Because

dismissal  was on  the  pleadings,  we assume  the  truth  of

statements in the complaint, cautioning that they have yet to

be proved.

     Annette and Joseph DeMauro were married in 1979.  Joseph

worked                   in                      the construction business and, according to Annette,

earned "millions of dollars," promising to share monies  with

Annette.  But  the marriage proved  less successful than  his

business.  The couple separated, and in 1994, Annette--a  New

Hampshire resident--sued for  divorce in New Hampshire  state

court.

     The divorce  action  has  been a  bitter  and  prolonged

contest.  At various times, Joseph has refused to pay spousal

support                    orders (which total more than $250,000), has failed to

appear for court proceedings, has resisted discovery requests

concerning his income and property interests by invoking  the

Fifth                  Amendment,                             and                                has                                    been held in contempt of court.  After

more than two years, the divorce action remains unresolved.

     In                    May                        1996,                             Annette                                     filed the instant suit in the federal

district court in Massachusetts.  The complaint named  Joseph

and                five                     other defendants:  Joseph's 42-year-old son, Nicholas

                             -2-                                         -2-

DeMauro; Joseph's sister and brother-in-law, Joan and  Edwar

                       ons allegedly controlled by Joseph and

 icholas--DeM                        auro Co., Inc. and Tri-Area Development Co., Inc.

Joseph                                                                        d            Martin;                    and                       two                           corporati            N      was alleged  to have a residence in Massachusetts  and

both corporations had offices in the state.

     The                     complaint                               set                                  forth                                        a RICO claim for civil conspiracy,

18 U.S.C. S 1961  et seq., specifying predicate  racketeering

acts of (1) mail fraud, 18 U.S.C. S 1341, (2) wire fraud,  18

U.S.C. S  1343,  and (3)  "extortionate threats,"  18  U.S.C.

S 1951.  The complaint also alleged pendent state-law claims1

for intentional infliction  of emotional distress, breach  of

fiduciary                      duty,                           conspiracy, fraudulent conveyances, and illegal

telephone recordings.

     In                    support                            of the RICO claim, the complaint charged inter

alia  that  Joseph  and  the  other  defendants  fraudulently

concealed                      from                          Annette                                  separate and marital property to prevent

her                from                     sharing in these assets.  Annette alleged that Joseph

and the other defendants

     by means of  false pretenses, representations,  and
     devices established bank and investment accounts in
     Switzerland,    [the]    Middle    East,    France,
     Liechtenstein, several states of the United  States
     and                     various                             and sundry other locations most of which
     accounts                          were established under the names of straws,
     sham   trusts,    shell   companies    and    phony

                                                               1                 Diversity                           jurisdict                                   ion was not available because although
Joseph                   is                      apparently not a New Hampshire resident, Annette and
the Martins are New  Hampshire residents, thus defeating  the
complete                     diversity                              requirement.  Casas Office Machines, Inc. v.
Mita                 Copystar America, Inc., 42 F.3d 668, 673 (1st Cir. 1994).

                             -3-                                         -3-

     "foundations,                             " all designed to conceal the location,
     extent, and existence of assets from [Annette]  and
     persons with whom [Joseph] did business.

     The  alleged activity  was undertaken  not by  Annette's

husband                    alone,                           but                              also                                   by others who comprised an alleged RICO

"enterprise," and it  involves alleged concealments "well  in

excess                   of                      a                        million dollars."  And, allegedly, Joseph not only

threatened to deprive Annette of assets but also boasted that

he had  bribed foreign officials  to secure  himself a  false

identity and foreign passport.

     In June 1996, all the defendants except Joseph moved  to

dismiss                    the                        suit                            on                               various grounds, including lack of standing

to               bring                     RICO claims and failure to plead fraud with requisite

particularity,                           Fed.                               R.                                  Civ. P. 9(b).  Joseph did not join these

motions because he  had not yet been served process,  despite

efforts                    by                       Annette                              to                                 locate and serve him.  Joseph was finally

served  with process  while  appearing involuntarily  in  New

Hampshire state court, having been arrested and brought there

for a hearing on his failure to pay ordered spousal support.

     On July 26, 1996, the district judge issued a seven-page

order.                                       He                      expressed                                doubt whether Annette had shown a property

interest protectible  under the  civil RICO  statute; but  he

ultimately did  not decide this  issue and instead  dismissed

without                    prejudice Annette's claims against all the defendants.

The dismissal  was  based  upon the  doctrine  of  abstention

established in Burford v.  Sun Oil Co., 319 U.S. 315  (1943).

                             -4-                                         -4-

Rather  than  staying  the  federal  proceedings,  the  court

dismissed, noting that Annette could

     replead if and when she can show a "property" right
     which . . . has been denied her by the  defendants'
     allegedly  illegal transfers--that  is,  after  the
     resolution of the divorce action and the  attendant
     allocation of marital assets.

     The  parties  had  not  addressed  the  possibility   of

abstention                       in                         their                               filings.  In August 1996, Annette moved for

reconsideration, arguing that  abstention was not proper  and

that, if it  were proper, the  court should stay  proceedings

rather                   than                       dismissing                                  the action.  The court denied her motion

without comment.  Annette now appeals.

     1.  For reasons that will become evident, we begin  with

the threshold issue bypassed  by the district court,  namely,

whether the plaintiff has made out a claim of "injury" to her

"business                      or                        property,"                                   as is required for a civil RICO damages

action.  18 U.S.C. S 1964(c).  This is sometimes described as

a "standing" issue.   There is plainly a case or  controversy

under                  Article III; but the statutory precondition of injury to

business or property must  also be met.  Sedima, S.P.R.L.  v.

Imrex Co., 473 U.S. 479, 496 (1985).

     One  might think  it obvious  that a  precondition in  a

federal                    statute                            would                                 be                                    defined uniformly by federal law.  Cf.

Agency Holding Corp. v. Malley-Duff &amp; Assoc., Inc., 483  U.S.

143, 147-49 (1987) (civil RICO statute of limitations).  This

is especially so where the same phrase--injury to business or

                             -5-                                         -5-

property--is also a long-standing requirement under section 4

of  the  Clayton Act,  15  U.S.C. S  15(a).   Yet,  the  RICO

precedents are filled with references to state property  law,

which is  often said to  govern by implicit  cross-reference.

E.g., Doe v. Roe, 958  F.2d 763, 768 (7th Cir. 1992)  (citing

cases).

     Some role does exist for state law.  There is no general

federal law of property transfers, so the question who owns a

piece                  of                     property                             is                                likely to be settled by state law.  On the

other hand, one might expect federal law to decide whether  a

given                  interest, recognized by state law, rises to the level of

"business                      or                        property,"                                   or whether "injury" has been done to it

by               the                   acts                        alleged.2  Where to set the "business or property"

threshold  depends on  federal  statutory purpose,  and  that

purpose is  likely to support  a definition  that is  uniform

throughout the country.

     In all events, the assets that Annette ultimately claims

to have been concealed are "property" by any definition:  the

complaint                      alleges fraudulent concealment and transfers of real

property                     and                         bank account funds by Joseph.  One difficulty--so

far as we can tell from the undeveloped record--is that  most

(perhaps all)  of this property may  have been held from  the

                                                               2                 E.g.                     ,                        A                        ssociated Gen. Contractors of California, Inc. v.
California State Council of Carpenters, 459 U.S. 519,  529-45
(1983) (examining the meaning of "injury" under section 4  of
the Clayton Act); compare Roma Constr. Co. v. aRusso, 96 F.3d
566, 579-80 n.10 (1st Cir. 1996) (Lynch, J., concurring).

                             -6-                                         -6-

outset in  Joseph's name  or in the  name of  others such  as

foundations                        that he controls.  The complaint also implies that

most                 (perhaps all) of the underlying assets were the result of

the success of Joseph's construction business.

     New                     Hampshire                               is                                 not                                     a                                       community property state, see Baker

v.               Baker                   ,                      421 A.2d 998, 1000 (N.H. 1980), and much of the real

property and monies described in the complaint may not yet be

Annette's property.  To  this extent, what Annette has is  an

expectancy:  in the divorce proceedings, some or much of this

property may be awarded  to Annette.  State law provides  for

"equitable division" in divorce actions of "all tangible  and

intangible property and assets  . . . belonging to either  or

both                 parties,                         whether                                 title to the property is held in the name

of either or both parties."  N.H. Rev. Stat. Ann. S 458:16-a.

An equal division is presumptively equitable.  Id. S  458:16-

a(II).

     If the real and other tangible property, or most of  it,

belongs                    to                       Joseph,                              can                                  it still be said that Annette's divorce-

suit claim to a share is also "property" protectible by RICO?

Possibly so.  Some precedent, at least under the Clayton Act,

extends                    protection                              to                                 intangibles under certain circumstances.3

     3E.g., E.A. McQuade Tours, Inc. v. Consolidated Air Tour
Manual                   Comm.,                         467 F.2d 178, 184 (5th Cir. 1972), cert. denied,
409 U.S.  1109  (1973) (contracts  are "property"  under  the
Clayton Act); cf. Logan v. Zimmerman Brush Co., 455 U.S. 422,
430-33                   (1982) (right to use adjudicatory procedures created by
state                  Fair                       Employment Practices Act is "property" protected by
the Due Process Clause).

                             -7-                                         -7-

But even if we assume arguendo that Annette's claim is itself

protected property,  the  question remains  whether  Joseph's

alleged efforts to  conceal what is still his property  (real

property  and cash)  has  "injured" Annette's  property  (her

inchoate claim).

     Certainly, Annette  may  be  worse off  because  of  the

concealment;                         but her legal claim remains intact, together with

various                    remedies directed at concealment of assets.  (In fact,

she has already obtained attachments in state court totalling

$33                million                        on property owned partly or solely by Joseph.)  No

one                knows                      what                          Annette                                  will be awarded in the divorce action or

whether Joseph's alleged efforts  to conceal will hamper  her

ability to collect.  In sum, any claim of present "injury" to

her                claim                      is                         speculative, so long as we are concerned with the

movement  of real property  or cash that  for now belongs  to

Joseph.

     Pertinent here  is a  decision of  this court  upholding

dismissal of  a civil RICO claim  brought by a plaintiff  who

alleged injury based on a "hypothetical inability to recover"

if it won its pending contract lawsuit against the defendant.

The                defendant                         had                             allegedly made fraudulent transfers of assets

to his wife; but we held that the RICO claim was not ripe for

adjudication because the claimed injury was too  speculative.

                             -8-                                         -8-

Lincoln  House, Inc. v.  Dupre, 903 F.2d  845, 847 (1st  Cir.

1990).  This and like decisions4 seem directly on point.

     To be sure, there is a certain arbitrariness in  drawing

the line here.   But while RICO  is to be construed  broadly,

Sedima, 473  U.S. at  498,  "injury to  property" is  not  an

infinitely                       elastic                              concept.  And in cases like this, it is hard

to               see                   how                       a                         court would calculate damages now, given the dual

uncertainties of what Annette will be awarded and how it will

be               affected                        by concealment.  See First Nationwide Bank v. Gelt

Funding Corp., 27 F.3d 763, 768 (2d Cir. 1994), cert. denied,

115                S.                   Ct.                       728 (1995) ("[A]s a general rule, a cause of action

does                 not                     accrue under RICO until the amount of damages becomes

clear and definite.").

     This conclusion--that Annette has not adequately alleged

injury to her  property--applies only to the extent that  the

concealed  property currently  belongs  solely to  Joseph  or

others.  However, the complaint also asserts that Joseph  has

sought to conceal  "marital" or "separate" property.  To  the

extent that Annette is claiming a present ownership interest,

she appears to be asserting injury to her property within the

terms                  of                     the                        RICO                             statute.  Cf. Grimmett v. Brown, 75 F.3d 506,

     4See  Barnett v. Stern, 909 F.2d 973, 977 n.4 (7th  Cir.
1990); Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1106  (2d
Cir. 1988), cert.  denied, 490 U.S.  1007 (1989); Capasso  v.
Cigna Ins. Co., 765 F. Supp. 839, 842 (S.D.N.Y. 1991).

                             -9-                                         -9-

516-17                   (9th                        Cir.),                              cert.                                    granted, 116 S. Ct. 2521 (1996), cert.

dismissed, 117 S. Ct. 759 (1997).

     Admittedly,  Annette's  allegations  of  ownership   are

confusing                      and                          in                            certain                                    respects lack supporting detail.  They

certainly could be explored through inquiry and discovery and

could be tested,  if doubtful, by a  motion to dismiss or  by

summary  judgment.   Still,  on  the  present  pleadings  the

possibility remains  that Annette  already owns  some of  the

property allegedly concealed  by Joseph and others.  On  that

premise, we turn to the issue of abstention.

     2.                                         We                        note                            at                               the                                   start                                         that the district court's remedy-

-dismissal                       on                         abstention                                    grounds--is not permissible.  Just two

months                   before                         the                             district court issued its ruling, the Supreme

Court                  held                       that abstention, under Burford or otherwise, may be

appropriate                        in                           suits                                for                                    damages.  Quackenbush v. Allstate Ins.

Co.              ,                 116                     S.                        Ct. 1712, 1728 (1996).  But the Court further held

that in a damages action, the district court may only order a

stay                 pending                         resolution of state proceedings; it cannot invoke

abstention to dismiss the suit altogether.  Id.

     The rationale of  Quackenbush is  that damages  actions,

unlike suits for equitable relief, do not invoke the  court's

equitable                      discretion.  Id. at 1727.  This rule may seem rather

wooden,                    given                          the                             merger                                    of law and equity, but the Court means

what                 it                    says:                                                    Quackenbus                                   h held that the dismissal of a damages

action  on Burford  grounds  was  reversible  error,  without

                            -10-                                        -10-

deciding whether "a more limited abstention-based stay  order

would have been warranted on the facts of this case."  Id. at

1728.  There  is no question that  the present RICO claim  is

primarily a damages action.  See complaint, qq 62-67.  It  is

uncertain                      whether                             equitable relief is even available to private

plaintiffs under civil RICO.  Lincoln House, 903 F.2d at 848.

     The  question remains  whether  the district  court  has

authority                      at                         least                              to                                 stay Annette's federal suit on abstention

grounds,  pending resolution  of  the New  Hampshire  divorce

proceeding.    In that  proceeding,  the  state  court  might

determine what property  is currently owned by Annette.   See

N.H.                 Rev.                      Stat. Ann. S 458:16-a(II).  For this reason, another

district court--cited by the district court in this case--has

abstained                      from adjudicating a federal RICO action brought by a

spouse involved  in pending divorce  proceedings.  Farkas  v.

D'Oca, 857  F. Supp. 300, 303-04  (S.D.N.Y. 1994).  See  also

Dibbs v. Gonsalves, 921 F. Supp. 44, 52 (D.P.R. 1996).

     This                      is                         not                            a                              wholly                                     persuasive reason given New Hampshire

law's stress  on an equitable  division of  all the  parties'

property.                                             The                          New                              Hampshire decree may just as well not decide

who owned specific property  prior to the divorce:  its  main

concern                    is                       with who will own what after the divorce.  And, the

Supreme Court has discouraged abstention based solely on  the

ground that a related state court action may address  similar

issues,  Colorado River  Water Conservation  Dist. v.  United

                            -11-                                        -11-

States                 ,                    424                       U.S.                            800,                                 817 (1976), with only limited exceptions,

e.g., Railroad Comm'n of  Texas v. Pullman Co., 312 U.S.  496

(1941). 

     A more  plausible basis for  abstention is the  possible

interference                         that a civil RICO action at this time might cause

to the state court's decision as to how to divide property in

the divorce.  The so-called domestic relations exception does

not preclude federal  courts from  adjudicating tort  actions

merely                   because the parties were married and are in the process

of               divorce.                                                 Ankenbrandt                                                                      v. Richards, 504 U.S. 689, 704 (1992).

But this  case is  not just a  tort action between  divorcing

parties:                                           the                         civil                               RICO                                    claim is directed to the same property

that is going to be allocated between the parties as a result

of the decree.  Cf. Colorado River, 424 U.S. at 819.

     In                    this                         instance,                                  the                                      state court may be unlikely to award

Joseph any interest in property now owned solely by  Annette,

but that  is hardly so clear  with respect to property  owned

jointly.  Suppose  Annette were awarded  the value (or  three

times                  the                      value)                            of                               disputed jointly owned property in the RICO

case                 and                     the                        state                              court                                    then determined that the same property

ought to be allocated to Joseph.  At the very least, there is

a    possibility     of    conflict    between     judgments,

      requiring one of them to be modified to take account of

the other.   Otherwise, the  state divorce decree's  intended

allocation of property could easily be frustrated.

                            -12-                                        -12-

     Another                         potential                                  conflict is Annette's expressed interest

in               seeking                      interim                              relief from the federal court, presumably by

way                of                  provisional                              attachments or other ad litem remedies.  Cf.

Fed. R. Civ. P. 64; Teradyne, Inc. v. Mostek Corp., 797  F.2d

43, 53 (1st Cir. 1986).  The federal court's ability to reach

and freeze out-of-state property may well be greater than the

New Hampshire  divorce court's.   At the  same time,  interim

allocations of property are standard fare for divorce courts,

and the obvious potential for interference with this function

is an extremely serious matter.

     Our                     case,                           and those kinds of threatened interference, are

not a  perfect fit  with the  Burford doctrine.   There,  the

Supreme Court  approved abstention to  avoid conflict with  a

comprehensive  state regime  of  business regulation.5    But

abstention                       doctrines are not "rigid pigeonholes," Pennzoil Co.

v. Texaco Inc., 481 U.S.  1, 11 n.9 (1987), and the  ultimate

question is whether there are "exceptional circumstances"  in

which  abstention "would  clearly serve  an important  . .  .

interest."                                               Colorado                                Rive                                   r, 424 U.S. at 813 (citation omitted).

Such an interest is potentially present here.  See also Minot

v. Eckardt-Minot, 13 F.3d 590, 593-95 (2d Cir. 1994).

      5Burford, 319  U.S. at 326 (allocation of oil  drilling
rights).                                           See                         also Alabama Public Serv. Comm'n v. Southern Ry.
Co.              ,                 341                     U.S. 341, 346-48 (1951) (scheduling of local railroad
service);                      All                        state Ins. Co. v. Sabbagh, 603 F.2d 228, 229 (1st
Cir. 1979) (setting of automobile insurance rates).

                            -13-                                        -13-

     Not                     only                          divorce, but the allocation of property incident

to a  divorce, are longstanding  local functions governed  by

state  law.    Ankenbrandt,  while  curtailing  the  domestic

relations                      exception,                                nevertheless made clear the priority given

the state resolution of family law issues, including  alimony

determinations.  504 U.S. at  704, 706.  See also Friends  of

Children, Inc.  v. Matava, 766 F.2d  35, 37 (1st Cir.  1985).

Divorces                     are                        frequently                                   accompanied by disputes about property,

including                      both                          interim                                  and final allocations.  Such state court

authority                      would be threatened if civil RICO actions become the

shadow proceeding for policing such disputes.

     We conclude  that abstention  by use  of a  stay may  be

permissible                        where                              a                               RICO                                    action is directed against concealment

or transfer of property that is the very subject of a pending

divorce                    proceeding.                                                                The                                    divorce proceedings might or might not

resolve  the   federal  dispute--there   are  many   possible

permutations and plenty of  unanswered legal questions.   But

staying  the federal  RICO  claim  will reduce  the  risk  of

interfering  with interim  state allocations  and permit  the

federal court to  tailor any final federal judgment to  avoid

undermining the divorce court's allocation of property.  

     3.  While  abstention may be  permissible, it cannot  be

automatic in  a case  of this kind.   A  decision to  abstain

requires not only that certain preconditions be met, but also

that                 the                     district                             court                                   reasonably find that such abstention is

                            -14-                                        -14-

appropriate in the case at hand.6  Of course, this may not be

much of an issue when the particular abstention rubric itself

 resumes                     stro

defendant  seeks a  federal  injunction interfering  with  an

ongoing state criminal trial.  Younger, 401 U.S. at 45, 54.

     Cases                       like                            the                               present                                       one differ markedly from situations

like Younger.  Not only  do we have far less experience  with            p           ngly in favor of abstention--for example, where a

civil  RICO actions  that  overlap divorce  proceedings,  but

extreme                    variations can be imagined both as to underlying facts

and equitable concerns.  Certainly in some instances a  civil

RICO claim  might be  so plausible  and so  distinct from  an

ordinary divorce action property dispute as to undermine  any

argument for a  stay; or even if  a trial were stayed,  there

might be a compelling argument for interim relief to  protect

the plaintiff's right to ultimate relief in the RICO action.

     In  sum,  abstention  here is  a  possible,  but  not  a

mechanical                       answer.                                                              The                                   district court's judgment cannot stand,

simply                   because it conflicts with Quackenbush.  Nor do we think

that  the  dismissal on  abstention  grounds  can  simply  be

transformed into  a stay;  such a stay  might in  the end  be

equitably justifiable, but not  without giving the parties  a

     6See Quackenbush, 116 S. Ct. at 1726-28; Colorado River,
424 U.S. at 818; Younger  v. Harris, 401 U.S. 37, 54  (1971);
Bath                 Memorial Hosp. v. Maine Health Care Fin. Comm'n, 853 F.2d
1007,                  1015                       (1st                           Cir.                                1988); Friends of Children, Inc., 766 F.2d
at 37.

                            -15-                                        -15-

chance to address the matter and not without an appraisal  by

the court that goes beyond the possible overlap in issues.

     In                    making                           such                               an                                  appraisal, the district court is free to

consider the  plausibility  of this  civil  RICO claim  as  a

freestanding cause of action, the actual threat in this  case

for                conflict                         between such a suit and the pending state divorce

action, any threat of immediate harm associated with  alleged

ongoing  civil RICO  violations,  and other  consequences  or

concerns                     that make it equitably reasonable to accelerate or to

defer consideration  of federal relief.   Once the  pertinent

factors  are mustered  and  assessed,  the  district  court's

exercise of  judgment  is  normally respected.    Friends  of

Children, Inc., 766 F.2d at 37.

     The district  court  has  no obligation  to  pursue  the

abstention issue at all if the matter can be disposed of more

appropriately on other grounds.  Motions to dismiss have been

made for  lack of standing  (an issue  discussed above),  for

failure to  plead  fraud with  particularity, and  for  other

reasons.   Possibly,  further  exploration will  reveal  that

Annette                    has                        no standing as to any of the property in question.

In all  events, the order  in which to  consider issues is  a

matter for the district judge.

     The treatment  of the pendent  state claims depends,  in

turn, on the outcome of the inquiries just described.  If the

district  court finds  no  basis for  a  claim of  injury  to

                            -16-                                        -16-

property,                      presumably                                it                                   will dismiss the pendent claims without

prejudice.  See 28 U.S.C. S 1367(c)(3).  If it determines  to

stay the  civil RICO claim  on abstention  grounds, then  the

treatment of the  pendent claims is  less clear-cut, see  id.

S 1367(c)(4), but the parties have not addressed that  issue,

and we express no view upon it.

     The judgment of  the district court  is vacated and  the

matter remanded for further proceedings consistent with  this

decision.

     It is so ordered.

                            -17-                                        -17-
