DELZOTTI v. MORRIS et al

Filing 17

OPINION. Signed by Chief Judge Jerome B. Simandle on 9/9/2015. (tf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
NICHOLAS J. DELZOTTI, as
Assignee for and on behalf of
VON MORRIS CORPORATION
HONORABLE JEROME B. SIMANDLE
Plaintiff,
v.

Civil No. 14-7223 (JBS/AMD)

ERIC MORRIS, SHIRLEY MORRIS,
MARK WOJCIK, CPA, VM
DECORATIVE, LLC, ERIC MORRIS
AND COMPANY, LLC, VON MORRIS
DECORATIVE HARDWARE, LLC, ABC
CORPS 1-10,

OPINION

Defendants.
APPEARANCES:
Eric R. Perkins, Esq.
Alfred R. Brunetti, Esq.
MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP
40 West Ridgewood Avenue
Ridgewood, NJ 07450
Attorneys for Plaintiff
Marshall T. Kizner, Esq.
Timothy P. Duggan, Esq.
STARK & STARK PC
993 Lenox Drive
Lawrenceville, NJ 08648
Attorneys for Defendants Eric Morris, Shirley Morris, VM
Decorative Company, LLC, Eirc Morris and Company, LLC, and
Von Morris Decorative Hardware, LLC
Adam E. Gersh, Esq.
John G. Koch, Esq.
FLASTER GREENBERG PC
1810 Chapel Avenue West
Cherry Hill, NJ 08002
Attorneys for Defendant Mark Wojcik, CPA

SIMANDLE, Chief Judge:
I.

INTRODUCTION
Von Morris Corporation (“VMC”) was a company that

manufactured, distributed, and sold decorative hardware for
many years, and its sole shareholder was Eric Morris. After VMC
began to experience financial difficulties in 2011, it was
forced in February of 2013 to deed its assets to Plaintiff
Nicholas Delzotti through a Deed of Assignment for the Benefit
of Creditors. Delzotti, on behalf of VMC, brings this action
alleging that Defendants Eric Morris and his mother, Shirley
Morris, along with VMC’s CPA, Mark Wojcik, devised and carried
out a fraudulent scheme to transfer VMC’s remaining assets out
of the company after VMC first began to experience financial
trouble, in order to avoid paying VMC’s creditors. Delzotti
alleges that between 2011 and 2013, Defendants transferred an
excess of $1.5 million, concealed as loans and repayments, out
of VMC’s coffers to Eric Morris, his mother Shirley Morris, and
three Limited Liability Companies1 created by the Defendants for
the sole purpose of facilitating the scheme. Plaintiff brings a
variety of state law claims against Defendants, including
violations of the New Jersey Uniform Fraudulent Transfer Act

1

These companies are Defendants VM Decorative, LLC; Eric Morris
and Company, LLC; and Von Morris Decorative Hardware, LLC.
2

(Counts One and Two), N.J.S.A. 25:2-25(a) & (b), and the New
Jersey RICO statute (Count Three), N.J.S.A. 2C:41-2, conspiracy
to commit a tort (Count Four), aiding in the commission of a
tort (Count Five), conversion (Count Six), accounting (Count
Seven), alter ego liability (Count Eight), and successor
liability (Count Nine).
Presently before the Court is the motion of all Defendants
except Wojcik under Rule 12(b)(6), Fed. R. Civ. P., to dismiss
the Complaint in full. [Docket Item 5.] For the reasons
explained below, the Court will dismiss the New Jersey RICO
claim (Count Three) because Plaintiff has failed to explain how
the conduct here constitutes “racketeering activity” defined in
N.J.S.A. 2C:41-1a. The Court will also dismiss the claim for
conspiracy to commit a tort (Count Four) because Plaintiff has
not pleaded special damages, and will dismiss the claim for
accounting (Count Seven) because an adequate remedy exists
through the normal discovery process. The Court will deny
Defendants’ motion with respect to all other claims.
II.

BACKGROUND
The facts below are taken from Plaintiff’s Complaint.2

2

Plaintiff originally filed his Complaint in the Superior
Court of New Jersey and Defendants removed the case to this
Court pursuant to 28 U.S.C. § 1441, asserting diversity
jurisdiction under 28 U.S.C. § 1332(a)(1). 28 U.S.C. § 1332(a)
provides district courts with “original jurisdiction of all
3

[Docket Item 1.] Eric Morris was the principal and sole
shareholder of Von Morris Corporation (“VMC”), a business
entity formerly engaged in the manufacture, sale, and

civil actions where the matter in controversy exceeds the sum
or value of $75,000, exclusive of interests and costs, and is
between – (1) citizens of different States.”
The Court has jurisdiction under 28 U.S.C. § 1332(a)(1)
because the parties are citizens of different states and the
amount of controversy exceeds $75,000. Plaintiff Nicholas
Delzotti is the Assignee of Von Morris Corporation, which has a
principal place of business in Camden, New Jersey. (Compl. ¶
1.) Defendants Eric Morris and Shirley Morris are citizens of
Pennsylvania (Compl. ¶¶ 2-3), and Mark Wojcik is a CPA licensed
in Pennsylvania. (Compl. ¶ 4.) Defendants asserted that
diversity jurisdiction was proper because Eric Morris and
Company, LLC, VM Decorative, LLC, and Von Morris Decorative
Hardware, LLC were citizens of Pennsylvania since their sole
shareholder, Shirley Morris, was a citizen of Pennsylvania.
(Notice of Removal [Docket Item 1] ¶¶ 7, 8, & 9.)
“The citizenship of partnerships and other unincorporated
associations is determined by the citizenship of its partners
or members.” Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592
F.3d 412, 420 (3d Cir. 2010) (citing Swinger v. Allegheny
Energy, Inc., 540 F.3d 179, 182 (3d Cir. 2008)). Because a
limited liability company “should be treated as a partnership
for purposes of establishing citizenship,” “the citizenship of
an LLC is determined by the citizenship of its members.” Id.
(noting that although limited liability entities resemble
corporations in many respects, every federal court of appeals
to address the question has concluded that a limited liability
company should be treated as a partnership); see also Brauser
Real Estate, LLC v. Meecorp Capital Markets, LLC, 2012 WL
1079540, at *3-4 (D.N.J. Mar. 30, 2012) (examining the
citizenship of members of an LLC for purposes of establishing
diversity jurisdiction).
Because the sole member of Eric Morris and Company, LLC,
VM Decorative, LLC, and Von Morris Decorative Hardware, LLC, is
Shirley Morris, a citizen of Pennsylvania, the LLC Defendants
are citizens of Pennsylvania. Since all Defendants are citizens
of Pennsylvania and Plaintiff is a citizen of New Jersey, and
the amount-in-controversy is greater than $75,000, diversity
jurisdiction is established.
4

distribution of decorative hardware and ornamentals. (Compl. ¶¶
8-9.) VMC operated for several years but began to experience
financial trouble in 2011. Finally, in February of 2013, after
determining that VMC no longer had the means to continue its
business, VMC’s Board of Directors authorized Morris to
surrender all of the company’s assets and liabilities to an
assignee, Plaintiff Nicholas Delzotti, for the benefit of VMC’s
creditors. (Id. ¶¶ 12-17.)
Plaintiff alleges that VMC’s financial difficulties “were
the manifestations of a façade” facilitated by Morris and his
mother, Shirley Morris, and VMC’s long-time accountant, Mark
Wojcik. (Id. ¶¶ 19, 22-23.) All three are named as defendants
in the Complaint.
Plaintiff alleges that all three defendants participated
in a fraudulent scheme “to abscond with VMC’s assets and shed
VMC’s lawful creditors.” (Compl. ¶ 20.) The financial scheme
“was designed to divert valuable property and significant sums
of money beyond the reach of VMC’s lawful creditors and to
related entities and alter egos controlled and/or held by
defendants Eric Morris and/or Shirley Morris.” (Id. ¶ 25.)
According to the Complaint, in 2011 and 2012, the
financial scheme “transferr[ed], divert[ed], and/or secret[ed]
more than $1.5 million in monies and inventory away from VMC
5

coffers and out of the reach of VMC creditors.” (Id. ¶ 26.)
Between 2011 and 2013, the financial scheme successfully
transferred, diverted, and secreted a “currently unknown amount
of valuable property and inventory.” (Id. at 32.)
Defendants directed “[p]ortions” of the $1.5 million to be
unlawfully transferred to Eric and Shirley Morris and another
individual.3 (Id. ¶¶ 27, 35.) Other “[p]ortions” of the $1.5
million were diverted to business entities controlled by Eric
and Shirley Morris, including VM Decorative, LLC, Eric Morris
and Company, LLC, and Von Morris Decorative Hardware, LLC
(collectively, “LLCs”), all of which are named as defendants in
the Complaint. (Id. ¶¶ 27-28.)4 Plaintiff asserts that
Defendants created the companies during the period leading up
to VMC’s insolvency specifically “for the purpose of
facilitating and concealing the unlawful actions undertaken by
defendants.” (Id. ¶ 29.)
The transfers were not properly disclosed. (Id. ¶ 45.)
Plaintiff alleges that the transfers were done with the intent

3

The Complaint states that Defendants also transferred assets
to a “Shirley Zheng,” who is not named as a defendant and whose
relationship to the parties is not specified in the Complaint.
(Id. ¶ 35.)
4 The Complaint also alleges that Defendants created a fourth
company, Kushan Von Morris, Ltd. (“Kushan”), not named as a
party to the action, and transferred some portion of VMC’s
assets to Kushan. (Compl. ¶¶ 34, 37-38.)
6

to hinder, delay, and defraud the creditors of VMC and deprive
them of money to which they were entitled. (Id. ¶¶ 42, 43, 70.)
He further alleges that the assets were transferred “beyond the
reach of VMC creditors” and “for less than adequate and full
compensation.” (Id. ¶¶ 32, 37.) The transfers “represented . .
. all of the assets of VMC” and caused VMC to become insolvent.
(Id. ¶ 33.)
Finally, he asserts that Defendants “misappropriated and
unlawfully utilized the industry reputation and assets of VMC
to the detriment of VMC’s lawful creditors. (Id. ¶ 39.)
Plaintiff brings nine causes of action. He asserts claims
of fraud under the New Jersey Fraudulent Transfer Act, N.J.S.A.
25:2-25(a) & (b) (Counts One and Two) and a claim under New
Jersey’s RICO statute, N.J.S.A. 2C:41-2 (Count Three). He also
brings common law claims for conspiracy to commit a tort (Count
Four); aiding in the commission of a tort (Count Five);
conversion (Count Six); accounting (Count Seven); alter ego
(Count Eight); and successor liability (Count Nine).
Defendants move to dismiss the Plaintiff’s Complaint
[Docket Item 5] primarily on the basis that the Complaint does
not contain enough factual allegations to plausibly support
each cause of action, and fails to plead the allegations of
fraud with sufficient specificity to meet the heightened
7

pleading requirement under Fed. R. Civ. P. 9(b).
III. STANDARD OF REVIEW
When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted under
Fed. R. Civ. P. 12(b)(6), a court must accept all well-pleaded
allegations in the complaint as true and view them in the light
most favorable to the nonmoving party. A motion to dismiss may
be granted only if a court concludes that the plaintiff has
failed to set forth fair notice of what the claim is and the
grounds upon which it rests that make such a claim plausible on
its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
Although the court must accept as true all well-pleaded
factual allegations, it may disregard any legal conclusions in
the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).
Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice. Iqbal,
556 U.S. at 678.
In addition, the complaint must contain enough wellpleaded facts to show that the claim is facially plausible.
This “allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id. at
678. The plaintiff must plead sufficient facts to “raise a
8

reasonable expectation that discovery will reveal evidence of
the necessary element,” Twombly, 550 U.S. at 556. If the wellpleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged – but
it has not “show[n]” – “that the pleader is entitled to
relief.” Id. at 679.
Rule 9(b) of the Fed. R. Civ. P. requires particularized
pleading for the conduct underlying fraud claims. Under Rule
9(b), the “circumstances” of the alleged fraud must be pled
with enough specificity to “place 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). Although the rule states that “[m]alice, intent,
knowledge, and other conditions of a person's mind may be
alleged generally,” and does not require the plaintiff to plead
every material detail of the fraud, the plaintiff must use
“alternative means of injecting precision and some measure of
substantiation into their allegations of fraud.” In re
Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216
(3d Cir.2002) (internal quotations and citations omitted).
IV. DISCUSSION
A. Fraud (Counts One and Two)

9

The Court will apply New Jersey law to all claims.5 Counts
One and Two of Plaintiff’s Complaint contain claims under the
New Jersey Uniform Fraudulent Transfer Act (“NJUFTA”), N.J.S.A.
25:2-20 et seq. Plaintiff alleges that Defendants fraudulently
transferred funds or property in violation of N.J.S.A. 25:225(a) and (b).6
“The purpose of the [NJUFTA] is to prevent a debtor from
placing his or her property beyond a creditor's reach” thereby
“deliberately cheat[ing] a creditor by removing his property

5

The entity Defendants in this case are incorporated in
Pennsylvania with a principal place of business in Pennsauken,
New Jersey. (Compl. ¶ 5.) Neither party has specifically
addressed the choice-of-law issue, but Defendants cite to New
Jersey state cases, and Plaintiff does not dispute that New
Jersey law applies. In the absence of a conflict between the
parties, the Court will apply the law of the forum state in
which it sits, which is New Jersey.
6 N.J.S.A. 25:2-25 provides:
A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor's
claim arose before or after the transfer was made or
the obligation was incurred, if the debtor made the
transfer or incurred the obligation:
a. With actual intent to hinder, delay, or defraud any
creditor of the debtor; or
b. Without receiving a reasonably equivalent value in
exchange for the transfer or obligation, and the
debtor:
(1) Was engaged or was about to engage in a business or
a transaction for which the remaining assets of the
debtor were unreasonably small in relation to the
business or transaction; or
(2) Intended to incur, or believed or reasonably should
have believed that the debtor would incur, debts beyond
the debtor's ability to pay as they become due.
N.J.S.A. 25:2-25.
10

from the jaws of execution.” Gilchinsky v. Nat’l Westminster
Bank N.J., 732 A.2d 482, 488 (N.J. 1999) (internal quotation
and citations omitted). To prove fraudulent conveyance under
N.J.S.A. 25:2-25, the plaintiff must allege and prove two
elements: first, that the debtor “has put some asset beyond the
reach of creditors which would have been available to them at
some point in time but for the conveyance,” and second, that
the debtor transferred property with an intent to defraud,
delay, or hinder the creditor. Id. at 488-89 (internal
quotations and citations omitted).
Claims under the NJUFTA are subject to the heightened
pleading standards of Fed. R. Civ. P. 9(b). MSKP Oak Grove, LLC
v. Venuto, 875 F. Supp. 2d 426, 434 (D.N.J. 2012) (Simandle,
J.) (citing Ford Motor Credit Co. v. Chiorazzo, 529 F. Supp. 2d
535, 538 (D.N.J. 2008)). Defendants argue that Plaintiff has
not pled his claims of fraud with particularity because there
is no explanation of the misconduct or the fraudulent acts that
Defendants allegedly engaged in. The Court disagrees. Fed. R.
Civ. P. 9(b) requires Plaintiff to state the circumstances of
the alleged fraud with enough specificity to place Defendants
on notice of the “precise misconduct with which [it is]
charged.” Fredrico v. Home Depot, 507 F.3d 188, 200 (3d Cir.
2007) (citation and quotations omitted).
11

The Court finds that the Complaint alleges sufficient
factual detail to satisfy the heightened pleading standard of
Rule 9(b). With respect to the first element of fraudulent
conveyance, the Complaint states that Defendants removed
substantially all of VMC’s assets to the LLCs over the course
of two years, placing the assets beyond the reach of VMC’s
creditors. The Complaint also includes factual allegations to
support a reasonable inference that the transfer of assets was
done “with an intent to defraud, delay, or hinder the
creditor.”
New Jersey courts look for certain “badges of fraud,”
listed in N.J.S.A. 25:2-26, to determine whether the
circumstances of a particular transaction give rise to the
conclusion that the transferor intended to thwart of evade
creditors. Gilchinsky, 732 A.2d at 476-77. Plaintiff has
alleged several facts in his Complaint that are recognized
“badges of fraud”: (1) the debtor, Eric Morris, “retained
possession or control of the property transferred after the
transfer,” N.J.S.A. 25:2-26(b); (2) Morris “removed or
concealed assets,” N.J.S.A. 25:2-26(g); (3) the assets
transferred from VMC to the LLCs were “substantially all the
debtor’s assets,” N.J.S.A. 25:2-26(e); and (4) VMC “became
insolvent shortly after the transfer was made.” N.J.S.A. 25:212

26(i).
To support the inference that the transfer of assets from
VMC to the LLCs were intended to defraud VMC’s creditors,
Plaintiff alleges that the LLCs were created specifically for
the purpose of facilitating the transfer of assets out of VMC
and concealing the scheme. (Compl. ¶ 29.) The transfers
occurred over a period of two years, beginning in 2011 through
the appointment of Plaintiff as the Assignee of VMC’s assets
and liabilities (id. ¶ 32), and were “intentionally
mischaracterized as loans and repayments” to the LLCs in order
to conceal the fraudulent scheme. (Id. ¶ 36.) Plaintiff further
alleges that VMC received “less than adequate and full
consideration” for the assets transferred out of its account to
the Defendant LLCs. (Id. ¶ 37.) Between 2011 and 2012,
Defendants transferred at least $1.5 million out of VMC, some
portions of which were transferred to the LLCs, other portions
of which were transferred directly to Eric and Shirley Morris.
(Id. ¶¶ 26-28.) Plaintiff also identifies VMC’s accountant,
Mark Wojcik, as playing a role in the fraud.
The Complaint therefore identifies the individuals who
assisted in the fraudulent transfers, identifies the exact
entities and individuals who received VMC’s assets, describes
how the fraud was concealed, the time period during which the
13

fraudulent transfers occurred, and the approximate value of the
assets transferred. These references “inject precision” into
Plaintiff’s allegations, and are sufficient to place Defendants
on notice of the misconduct with which they are charged. See
Cevdet Aksut Ve Ogullari Koll. Sti v. Cavusoglu, No. 14-3362,
2015 WL 4317750, at *7 (D.N.J. July 14, 2015) (stating
plausible claim of fraud under N.J.S.A. 25:2-25). Because the
Court finds that Plaintiff has pled the circumstances of the
fraud with the specificity required under Fed. R. Civ. P. 9(b),
the Court will deny Defendants’ motion with respect to Counts
One and Two and permit the claims of fraudulent conveyance to
proceed.
B. RICO (Count Three)
New Jersey’s RICO statute, N.J.S.A. 2C:41-2, makes it
unlawful for any person “employed by or associated with any
enterprise engaged in or activities of which affect trade or
commerce to conduct or participate, directly or indirectly, in
the conduct of the enterprise's affairs through a pattern of
racketeering activity or collection of unlawful debt.” N.J.S.A.
2C:41-2c.
A claim for the violation of New Jersey's RICO statute
requires the plaintiff to allege: (1) the existence of an
enterprise; (2) that the enterprise engaged in activities
14

affecting trade or commerce; (3) that the defendant was
employed by or associated with the enterprise; (4) that the
defendant participated in the conduct of the affairs of the
enterprise; (5) that the defendant participated through a
pattern of racketeering activity; and (6) that the plaintiff
suffered injury as a result of the conspiracy. Galicki v. New
Jersey, No. 14-169, 2015 WL 3970297, at *7 (D.N.J. June 29,
2015); Slimm v. Bank of Am. Corp., No. 12-5846, 2013 WL
1867035, at *19 (D.N.J. May 2, 2013).
The New Jersey RICO statute is parallel in structure and
substance to the federal RICO statute, 18 U.S.C. § 1962.
Because the language of the subsections in both statutes are
virtually identical, New Jersey courts will “look to federal
decisions interpreting RICO,” except where they are
inconsistent with the decisions of New Jersey courts. Maxim
Sewerage Corp. v. Monmouth Ridings, 640 A.2d 1216, 1219 (N.J.
Super. Ct. Law Div. 1993); see also State v. Ball, 661 A.2d
251, 258 (N.J. 1995) (“[B]ecause the federal statute served as
an initial model for our own, we heed federal legislative
history and case law in construing our statute”). New Jersey
courts take a “liberal stance in permitting plaintiffs to plead
[New Jersey RICO] violations, rejecting the narrow construction
of the federal statute that many circuits, including this one,
15

have adopted.” Slimm, 2013 WL 1867035, at *19; Ford Motor Co.
v. Edgewood Props., Inc., No. 06-1278, 2009 WL 150951, at *10
(D.N.J. Jan. 20, 2009).
Defendants contend that Plaintiff has failed to show the
existence of an “enterprise devised and employed to engage in
activities which affected trade and commerce across the borders
of the State of New Jersey by transferring or diverting sums of
money.” (Def. Br. at 8.) Defendants also argue that “there is
no explanation of the ‘pattern of racketeering activity’
allegedly committed by the Morris Defendants.” (Id. at 8.)
Although the Court finds both arguments without merit, it will
nonetheless dismiss Plaintiff’s RICO claim without prejudice,
as explained below.
The New Jersey Supreme Court has stated that “enterprise”
is an element distinct from the incidents constituting the
“pattern of racketeering activity,” and the existence of both
must be proved in order to establish a RICO violation. State v.
Ball, 661 A.2d 251, 261 (N.J. 1995). The enterprise is the
“vehicle through which the unlawful pattern of racketeering
activity is committed.” Nat’l Org. for Women, Inc. v.
Scheidler, 510 U.S. 249, 259 (1994); see also Jaguar Cars, Inc.
v. Royal Oaks Motor Car Co., 46 F.3d 258, 267 (3d Cir. 1995).
“The hallmark of an enterprise's organization consists [] in
16

those kinds of interactions that become necessary when a group,
to accomplish its goal, divides among its members the tasks
that are necessary to achieve a common purpose.” Id. Thus, the
enterprise element requires showing a common purpose and an
ascertainable structure “support[ing] the inference that the
group engaged in carefully planned and highly coordinated
criminal activity.” Id.; see also Ford Motor Co., 2009 WL
150951, at *11 (noting that under New Jersey’s broad
interpretation, an enterprise need only be identified by “the
existence of an ascertainable structure, . . . or by an
informal organization which demonstrates a division of labor
among individuals.”).
Contrary to Defendants’ contention, Plaintiff has alleged
sufficient facts showing the existence of an enterprise to
overcome a motion to dismiss. The Complaint alleges an
unofficial association involving Eric Morris, Shirley Morris,
Nick Wojcik, and the three LLCs, in which Eric and Shirley
Morris used the LLCs to conceal the the actions of the
individual Defendants and as a vehicle to receive unlawful
transfers of assets from VMC. In addition to diverting funds to
the LLCs, the association also diverted funds directly to Eric
and Shirley Morris, all for the common purpose of absconding
with VMC’s assets and avoiding VMC’s creditors. (Compl. ¶ 20.)
17

The Complaint further notes the role of each individual
Defendant in the enterprise. It alleges that Eric and Shirley
Morris devised the overall fraudulent scheme, and that Wojcik’s
role in the enterprise was to “assist[] in the design of and
execution of the intricate financial schemes devised by
defendants Eric Morris and Shirley Morris.” (Id. ¶ 22.) The
Court finds that Plaintiff has plausibly pled the existence of
an enterprise.
Nevertheless, the Court will dismiss Plaintiff’s RICO
claim because Plaintiff has not identified anywhere in his
complaint how the predicate conduct of fraudulent conveyance
qualifies as “racketeering activity” under the New Jersey RICO
statute. N.J.S.A. 2C:41-1a lists a number of activities that
fall within the definition of “racketeering activity.” The
alleged illegal conduct in this case, fraudulent transfer or
fraudulent conveyance under N.J.S.A. 25:2-25, is not listed as
one of the enumerated activities, which include, inter alia,
murder, kidnapping, gambling, robbery, bribery, extortion,
criminal usury, arson, burglary, and fraud in the offering,
sale or purchase of securities. Nor does 2C:41-1a list as a
“racketeering activity” any violation of the NJUFTA, or Title
25 of the New Jersey statutes.7 The Court has found only a

7

The full list of “racketeering activity” is as follows:
18

single case in this district involving a RICO claim predicated

(1) any of the following crimes which are crimes under
the laws of New Jersey or are equivalent crimes under
the laws of any other jurisdiction: (a) murder; (b)
kidnapping; (c) gambling; (d) promoting prostitution;
(e) obscenity; (f) robbery; (g) bribery; (h) extortion;
(i) criminal usury; (j) violations of Title 33 of the
Revised Statutes; (k) violations of Title 54A of the
New Jersey Statutes and Title 54 of the Revised
Statutes; (l) arson; (m) burglary; (n) theft and all
crimes defined in chapter 20 of Title 2C of the New
Jersey Statutes; (o) forgery and fraudulent practices
and all crimes defined in chapter 21 of Title 2C of the
New Jersey Statutes; (p) fraud in the offering, sale or
purchase of securities; (q) alteration of motor vehicle
identification numbers; (r) unlawful manufacture,
purchase, use or transfer of firearms; (s) unlawful
possession or use of destructive devices or explosives;
(t) violation of sections 112 through 116 inclusive of
the “Casino Control Act,” P.L.1977, c. 110 (C.5:12-112
through 5:12-116); (u) violation of N.J.S. 2C:35-4,
N.J.S. 2C:35-5 or N.J.S. 2C:35-6 and all crimes
involving
illegal
distribution
of
a
controlled
dangerous substance or controlled substance analog,
except possession of less than one ounce of marijuana;
(v) violation of subsection b. of N.J.S. 2C:24-4 except
for subparagraph (b) of paragraph (5) of subsection b;
(w) violation of section 1 of P.L.1995, c. 405 (C.2C:3916), leader of firearms trafficking network; (x)
violation of section 1 of P.L.1983, c. 229 (C.2C:3914), weapons training for illegal activities; (y)
violation of section 2 of P.L.2002, c. 26 (C.2C:38-2),
terrorism; (z) violation of section 1 of P.L.2005, c.
77 (C.2C:13-8), human trafficking; (aa) violation of
N.J.S. 2C:12-1 requiring purposeful or knowing conduct;
(bb) violation of N.J.S. 2C:12-3, terroristic threats;
(2) any conduct defined as “racketeering activity”
under Title 18, U.S.C.S. 1961(1)(A), (B) and (D).
N.J.S.A. 2C:41-1a. Although the list includes “forgery and
fraudulent practices and all crimes defined in chapter 21 of
Title 2C of the New Jersey Statutes,” N.J.S.A. 2C:411a(1)(o), fraudulent transfer falls under Title 25 of the
New Jersey Statutes. See N.J.S.A. Title 25 et seq. (Frauds
and Fraudulent Conveyances).
19

on fraudulent conveyance, and the court in that case did not
directly address whether fraudulent conveyance under N.J.S.A.
25:2-25 qualified as “racketeering activity” for purposes of
RICO. See Cevdet Aksut Ve Ogullari Koll. Sti v. Cavusoglu, No.
14-3362, 2015 WL 4317750, at *7-9 (D.N.J. July 14, 2015).
Accordingly, the Court will dismiss Plaintiff’s RICO claim
without prejudice to Plaintiff’s right to amend to plead the
appropriate “racketeering activity” under N.J.S.A. 2C:41-1(a).
C. Conspiracy to Commit a Tort and Aiding in the
Commission of a Tort (Counts Four and Five)
The tort of civil conspiracy under New Jersey law contains
the following four elements: (1) a combination of two or more
persons; (2) a real agreement or confederation with a common
design; (3) the existence of an unlawful purpose, or of a
lawful purpose to be achieved by unlawful means; and (4) proof
of special damages. Morganroth & Morganroth v. Norris,
McLaughlin & Marcus, 331 F.3d 406, 414 (3d Cir. 2003) (citing
Naylor v. Harkins, 99 A.2d 849, 855 (1953), modified on other
grounds, 109 A.2d 19 (1954). In addition, one of the parties
must commit “some act that is itself a tort” in pursuance of
the agreement. “Mere agreement to do an act can never alone
amount to a tort.” Id. (citation omitted).
Defendants argue that the Complaint fails to explain the
alleged agreement between the Defendants and fails to plead
20

special damages. (Def. Br. at 9.) The Court holds that the
facts plausibly show the existence of an agreement between the
Defendants, but agrees with Defendants that Plaintiff has
failed to allege special damages.
The Complaint alleges that Eric Morris, Shirley Morris,
and Mark Wojcik “collaborated and conspired” to form the LLCs
for the purpose of accepting diverted assets from VMC in order
to avoid paying VMC’s creditors. (Compl. ¶ 29.) The Defendants
directed the funds to be transferred from VMC to the LLCs and
to Eric and Shirley Morris, and VMC received less than adequate
and full consideration for the transferred assets. (Compl. ¶¶
34, 35-37.) Further, in order to conceal the transfers,
Defendants “intentionally mischaracterized [them] as loans and
repayments.” (Compl. ¶ 36.) Taking these allegations as true,
the Court finds that they plausibly show an alleged agreement
between the Defendants to place VMC’s remaining assets out of
reach so as to avoid paying VMC’s creditors.
The Court will, however, dismiss Plaintiff’s claim of
civil conspiracy because Plaintiff has not pleaded special
damages. “Special, as contradistinguished from general damage,
is that which is the natural, but not the necessary,
consequence of the act complained of.” Roberts v. Graham, 73
U.S. 578, 580 (1867); see also Wright & Miller, Federal
21

Practice & Procedure § 1310, at 347 (3d ed. 2004) (special
damages are considered “those elements of damages that are the
natural, but not the necessary or usual, consequence of the
defendant’s conduct.”); Neal v. Honeywell, Inc., 191 F. 3d 827,
832 (7th Cir. 1999) (“The usual consequences of a wrong are
‘general’ damages, and unusual consequences are ‘special.’”);
Huyler’s v. Ritz-Carlton Rest. & Hotel Co., 6 F.2d 404, 406 (D.
Del. 1925) (“Both [special and general] damages must be the
natural and proximate consequence of the breach complained of,
but general damages are such as inevitably follow, while
special damages are such as may or may not follow the
breach.”). Unlike general damages, which are implied or
presumed by the law, special damages “must be specifically
pled.” Fed. R. Civ. P. 9(g); see also Huyler’s, 6 F.2d at 406
(special damages “are not so implied or presumed, and must be
specially pleaded and proved.”). The purpose underlying Rule
9(g) is “to give notice to the other side of those ‘special’
damages claimed.” Lawley v. Northam, No. 10-1074, 2013 WL
1786484, at *24 (D. Md. Apr. 24, 2013) (internal quotations and
citation omitted).
Plaintiff states only that he seeks “actual, proximate and
punitive damages” resulting from Defendants’ conspiracy to
“commit unlawful acts including the fraudulent transfer of
22

monies and properties belonging to VMC.” (Compl. ¶ 64.) While
the Complaint states that the actual damages from the unlawful
transfers were in excess of $1.5 million, nowhere in the
Complaint does Plaintiff identify additional special damages
resulting from Defendants’ conduct. Accordingly, the Court will
dismiss without prejudice Plaintiff’s claim for conspiracy to
commit a tort (Count Four). See Travelodge Hotels, Inc. v. BOED Inc., No. 04-4310, 2007 WL 8053668, at *10 (D.N.J. 2007)
(dismissing civil conspiracy claim in part because plaintiff
failed to allege any special damages).
Plaintiff pleads the related claim of aiding in the
commission of a tort in Count Five. A claim for aiding and
abetting arises when one party “‘knows that the other’s conduct
constitutes a breach of duty and gives substantial assistance
or encouragement to the other so to conduct himself.’”
Restatement (Second) of Torts § 876(b) (followed by Tarr v.
Ciasulli, 853 A.2d 921, 929 (N.J. 2004)); see also Failla v.
City of Passaic, 146 F.3d 149, 158 (3d Cir. 1998) (noting that
New Jersey adopts a definition of civil aiding and abetting
liability consistent with the Restatement (Second) of Torts §
876(b)); Judson v. Peoples Bank & Trust Co., 134 A.2d 761, 767
(1957) (citing Restatement (Second) of Torts § 876(b)); New
Jersey ex rel. McCormac v. Qwest Commc’ns, Int’l., Inc., 904
23

A.2d 775, 782 (N.J. Super. Ct. App. Div. 2006). Under New
Jersey law, aiding and abetting requires a plaintiff to show
that the principal performed an unlawful act; and the defendant
knowingly and substantially assisted in the principal’s
violation, and was generally aware of his role as part of an
overall tortious activity at the time he provided assistance.
Qwest, 904 A.2d at 784 (applying elements recognized by the
Supreme Court in Tarr and to a claim of aiding and abetting
fraud).
Plaintiff has alleged sufficient facts to make out a claim
that Shirley Morris and Nick Wojcik aided Eric Morris (the
principal) in the fraudulent conveyance of VMC’s assets. The
Complaint alleges that Shirley Morris and Nick Wojcik knowingly
assisted in fraudulent conveyance by creating the LLCs in order
to facilitate the fraud and by actually directing the transfer
of VMC assets to the LLCs. In addition, Wojcik “assist[ed] in
the design of and execution of the intricate financial schemes”
and used his professional abilities as a CPA to “conceal and
misrepresent VMC’s financial activities.” (Compl. ¶ 22-23.)
These facts also show that Morris and Wojcik were generally
aware of their roles because they were active participants in
the fraud and helped to devise parts of the fraudulent scheme.
See Qwest, 904 A.2d at 484.
24

Accordingly, the Court will dismiss Court Four
(conspiracy) without prejudice and permit Count Five (aiding in
the commission of a tort) to proceed.
D. Conversion (Count Six)
The Court finds that the Plaintiff has also plausibly
pleaded a claim for conversion. At its core, conversion is the
“wrongful exercise of dominion or control over the property of
another without authorization and to the exclusion of the
owner's rights in that property.” Chicago Title Ins. Co. v.
Ellis, 978 A.2d 281, 288 (N.J. Super. Ct. App. Div. 2009);
Commercial Ins. Co. of Newark v. Apgar, 267 A.2d 559, 562 (N.J.
Super. Ct. Law Div. 1970). Conversion does not require that
defendant have an intent to harm the rightful owner, or know
that the money belongs to another. Ellis, 978 A.2d at 288. “It
is the effect of the act which constitutes the conversion.”
Bondi v. Citigroup, Inc., 32 A.3d 1158, 1192 (N.J. Super. Ct.
App. Div. 2011) (quoting Charles Bloom & Co. v. Echo Jewelers,
652 A.2d 1238, 1242 (N.J. Super. Ct. App. Div. 1995)).
Contrary to Defendants’ assertion, there are specific
factual allegations in the Complaint to support Plaintiff’s
contention that Defendants exercised dominion and control over
property they were not entitled to exercise control over. The
Complaint alleges that VMC’s assets were transferred to LLCs
25

that are controlled or owned by Defendants Eric and Shirley
Morris. Although most of the transfers occurred in the period
before Delzotti was appointed the Assignee, the Complaint
alleges that the transfers occurred “through appointment of the
Assignee.” (Compl. ¶ 32.) While Plaintiff provides no specific
date for when the last transfer occurred, the Court takes these
allegations as true and, drawing an inference in Plaintiff’s
favor, interprets the phrase “through appointment of the
Assignee” to mean that at least some of VMC’s property was
transferred to the LLCs after February 20, 2013, the date on
which Morris executed the Deed of Assignment and Delzotti
obtained ownership over VMC’s assets.
The Court will therefore deny Defendants’ motion to
dismiss with respect to Count Six.
E. Accounting (Count Seven)
Plaintiff seeks an accounting of all of VMC’s financial
transactions, “including, without limitation, the transfer of
VMC inventory and property” from 2009 onwards. (Compl. ¶ 74.)
“The exercise of the equitable jurisdiction to compel an
account rests upon three grounds, -- first, the existence of a
fiduciary of trust relation; second, the complicated nature of
character of the account; and third, the need of discovery.”
Borough of Kenilworth v. Graceland Mem. Park Ass’n, 199 A. 716
26

(Chanc. Ct. 1938); see also In re U.S. Mortg. Corp., 492 B.R.
784, 813 (D.N.J. 2013) (“The party seeking to obtain an
accounting must establish: (1) a fiduciary or trust
relationship; (2) the complicated nature of the character of
the account; and (3) the need of discovery.”).
Defendants argue that this count must be dismissed because
there is “no recognizable cause of action to compel discovery
through a Complaint.” (Def. Br. at 10.) The Court does not
agree. Courts in the Third Circuit and this district have long
recognized a claim for accounting based on the existence of a
fiduciary duty and the need for discovery. See, e.g., In re
U.S. Mortg. Corp., 492 B.R. at 819 (declining to dismiss
accounting claim because discovery was needed to determine
whether a fiduciary relationship existed); SalandStacy Corp. v.
Freeney, No. 11-3439, 2012 WL 3638696, at *6 (D.N.J. Aug. 22,
2012) (dismissing claim for accounting because plaintiffs
failed to sufficiently plead the existence of a fiduciary
duty); In re Am. Home Mort. Holding, 458 B.R. 161, 171 (D. Del.
2011) (“[A]lleging a need for discovery is sufficient to
support a claim for accounting.”).
However, because an accounting is an equitable remedy, the
plaintiff must show that there is no adequate remedy at law.
See Rainbow Apparel, Inc. v. KCC Trading, Inc., No. 09-5319,
27

2010 WL 2179146, at *6–7 (D.N.J. May 26, 2010) (“‘The necessary
prerequisite to the right to maintain a suit for an equitable
accounting, like all other equitable remedies, is [ ] the
absence of an adequate remedy at law.’” (quoting Dairy Queen,
Inc. v. Wood, 369 U.S. 469, 478 (1962))). Plaintiff’s
accounting claim seeks information regarding VMC’s financial
transactions from 2009 onwards. In other words, Plaintiff
appears to be seeking information directly relevant to proving
his claim of fraudulent conveyance, among other remaining
claims. Because this information is readily obtainable through
the normal course of discovery, and Plaintiff has made no
showing why discovery under Fed. R. Civ. P. 26(b) provides an
inadequate remedy, the Court will dismiss Count Seven without
prejudice. See Benefit Control Methods v. Health Care Servs.,
Inc., No. 97-4418, 1998 WL 22080, at *2 (E.D. Pa. Jan. 16,
1998) (dismissing claim for accounting because the information
requested was available through discovery).
F. Alter Ego (Count Eight)
In Court Eight, Plaintiff seeks to impose alter ego
liability on the entity Defendants and individual Defendants to
hold them jointly and severally liable for damages.
Piercing the corporate veil, also known as “alter ego
liability,” is a remedy that is involved when [a subservient]
28

corporation is acting as an alter ego of [a dominant
corporation.]” Bd. of Trustees of Teamsters Local 863 Pension
Fund v. Foodtown, Inc., 296 F.3d 164, 171 (3d Cir. 2002)
(internal quotations and citation omitted). By piercing the
corporate veil, a court “may impose liability on an individual
or entity normally subject to the limited liability protections
of the corporate form.” The Mall at IV Group Props., LLC v.
Roberts, No. 02-4692, 2005 WL 3338369, at *3 (D.N.J. Dec. 8,
2005); see also Patel v. Pandya, No. 14-8127, 2015 WL 4523283,
at *6 (D.N.J. July 27, 2015). The New Jersey Supreme Court has
noted that the purpose of the doctrine is “to prevent an
independent corporation from being used to defeat the ends of
justice, to perpetuate fraud, to accomplish a crime, or
otherwise to evade the law.” State v. Ventron Corp., 468 A.2d
150, 164 (N.J. 1983).
For the principle to apply, there must be a finding that
the “parent so dominated the subsidiary that it had no separate
existence but was merely a conduit for the parent.” Id. (citing
1 W. Fletcher, Cyclopedia of the Law of Private Corporations §
41.1 (Perm. ed. 1974 rev.)). Liability is imposed only when the
parent has abused the privilege of incorporation by using the
subsidiary to perpetuate fraud or injustice. Id. (citing
Mueller v. Seaboard Comm. Corp., 73 A.2d 905, 908 (1950)); see
29

also Holzli v. DeLuca Enterprises, No. 11-6148, 2012 WL 983693,
at *2 (D.N.J. Mar. 21, 2012) (Simandle, J.) (piercing the
corporate veil requires “such unity of interest and ownership
that the separate personalities of the corporation and the
individual no longer exist.”)
Although common ownership and common management will not
automatically give rise to common liability, courts will pierce
the corporate veil to hold numerous closely held corporations
and their owners liable where certain facts suggest that an
agency or similar relationship exists between the entities,
such as
“when there is a confused intermingling of activity of
two or more corporations engaged in a common enterprise
with substantial disregard of the separate nature of
the corporate entities, or serious ambiguity about the
manner and capacity in which the various corporations
and their respective representatives are acting. In
such circumstances, in imposing liability upon one or
more of a group of ‘closely identified’ corporations,
a court need not consider with nicety which of them’
ought to be held liable for the act of one corporation
‘for which the plaintiff deserves payment.”
Stochastic Decisions, Inc. v. DiDomenico, 565 A.2d 1133,
1136 (N.J. Super. Ct. App. Div. 1989) (quoting My Bread
Baking Co. v. Cumberland Farms, Inc. et al., 233 N.E.2d 748,
752 (1968)).
Plaintiff alleges in Count Eight that LLC Defendants
“intermingled their corporate funds, dealing, and affairs” and
30

“failed to follow and abide by appropriate corporate
formalities.” (Compl. ¶¶ 76-77.) He also alleges that Eric
Morris and Shirley Morris “intermingled corporate and personal
funds, dealings and affairs” with the entity Defendants “such
that said entities were merely an alter ego of defendants Eric
Morris and Shirley Morris.” (Id. ¶ 78.)
The Court finds Plaintiff’s allegations of intermingling
plausible, particularly in light of other allegations that the
LLCs were all created and controlled solely by Eric and Shirley
Morris and that Eric and Shirley Morris directed the transfer
of VMC assets to themselves and to each of the three LLCs which
they owned. In addition, Plaintiff has alleged that the LLCs
were created solely for the purpose of facilitating and
concealing the unlawful transfer of assets from VMC. Taking all
of these allegations as true, Plaintiff has provided more than
a sufficient basis to allow a claim for piercing the corporate
veil to proceed. See Motorola, Inc. v. Airdesk, Inc., 2005 WL
894807, at *2 (E.D. Pa. Apr. 15, 2005) (permitting a claim for
piercing the corporate veil where complaint alleged
intermingling of corporate and personal funds and the use of
corporate funds for personal purposes); DiDomenico, 565 A.2d at
1136 (situation where corporate defendants made impermissible
payments to their owners provided “the classic criteria for
31

piercing the corporate veil.”). However, since the Complaint is
void of any allegations that Mark Wojcik owned or controlled
any of the LLCs, intermingled personal and corporate funds, or
received any assets from the LLCs, alter ego liability will
apply only to the entity Defendants, Eric Morris, and Shirley
Morris.
The Court will deny Defendants’ motion to dismiss this
claim.
G. Successor Liability (Count Nine)
Plaintiff seeks to impose successor liability on the LLCs
in Count Nine of the Complaint. He alleges that there was a de
facto merger among VMC and the entity Defendants “due to the
unlawful diversion and transfer of VMC funds, assets, capital
and inventory” to the LLCs. (Compl. ¶ 81.)
A corporation may be considered a successor of another
corporation and thus liable for its predecessor’s debts when it
acquires all or substantially all of the assets of its
predecessor and the transaction amounts to a consolidation or
merger of the two entities, or the purchasing corporation is a
mere continuation of the predecessor corporation. Lefever v.
K.P. Hovnanian Enterp. Inc., 734 A.2d 290, 292 (N.J. 1999);
Ramirez v. Amsted Indus., Inc., 431 A.2d 811, 815 (N.J. 1981).
Plaintiff has pleaded sufficient facts to demonstrate that
32

successor liability applies. The existence of a de facto merger
is supported by the fact that VMC and the LLCs shared a common
owner – Eric Morris. Moreover, Plaintiff alleges that VMC and
the LLCs had a “continuity of business operations and
personnel.” (Compl. ¶ 82.) Finally, Plaintiff alleges that
Defendants transferred VMC’s assets to the LLCs “so that the
defendant entities could continue the business and de facto
operations of VMC,” and that all of VMC’s assets were
ultimately transferred to the LLCs. (Compl. ¶¶ 46, 82.) Taking
these allegations as true and drawing all favorable inferences,
the Court finds that Plaintiff has stated enough facts to
plausibly allege a de facto merger between VMC and the entity
Defendants such that the doctrine of successor liability
applies.8
The Court will accordingly deny Defendants’ motion to
dismiss Count Nine.
IV. CONCLUSION
For the foregoing reasons, the Court will deny Defendant’s
motion to dismiss with respect to Counts One and Two

8

Defendants’ argument, that the LLCs cannot be a mere
continuation of VMC because VMC was turned over to Delzotti, is
without merit. (Def. Br. at 11-12.) According to the Complaint,
the majority of VMC’s assets were transferred to the LLCs
before the Assignment Proceeding took place, and the facts
supporting a de facto merger between VMC and the LLCs existed
even before the assignment.
33

(fraudulent transfer), Five (aiding and abetting in the
commission of a tort), Six (conversion), Eight (alter ego
liability) and Nine (successor liability). The Court will grant
Defendant’s motion with respect to Counts Three (RICO), Four
(conspiracy to commit a tort), and Seven (accounting). Counts
Three and Four will be dismissed without prejudice, while Count
Seven is dismissed without prejudice to Plaintiff’s right to
obtain full discovery of Defendants’ financial information
sufficient to perform an accounting. The accompanying Order
will be entered.

September 9, 2015
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge

34