SPRINT SOLUTIONS, INC. et al v. J&S INVESTMENTS OF DELAWARE, INC. et al
OPINION. Signed by Judge Noel L. Hillman on 1/31/2017. (TH, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
SPRINT SOLUTIONS, INC. and
SPRINT COMMUNICATIONS COMPANY
J&S INVESTMENTS OF DELAWARE,
INC. doing business as
CELLUSALES, SARABJIT SINGH
also known as SAM SINGH,
FRANK J. ALTAMURA, KARAMJEET
SINGH also known as
JARRETT KIRK VINE
222 DELAWARE AVENUE
WILMINGTON, DE 19801
JASON A. NAGI
600 THIRD AVENUE, 42ND FLOOR
NEW YORK, NY 10016
STACEY K. SUTTON
JAMES B. BALDINGER
CARLTON FIELDS JORDEN BURT, P.A.
525 OKEECHOBEE BOULEVARD -- SUITE 1200
WEST PALM BEACH, FL 33401
GAIL E. PODOLSKY
CARLTON FIELDS JORDEN BURT, P.A.
1201 WEST PEACHTREE STREET, SUITE 3000
ATLANTA, GEORGIA 30309
On behalf of Plaintiffs
CRAIG S. HILLIARD
STARK & STARK, PC
PRINCETON PIKE CORPORATE CENTER
993 LENOX DRIVE - BUILDING TWO
PO BOX 5315
PRINCETON, NJ 08543-5315
On behalf of Defendants J&S Investments of Delaware, Inc.,
doing business as CELLUSALES, Frank J. Altamura, and
Sarabjit Singh, also known as Sam Singh
LAW FIRM OF SABINA DHILLON, LLC
103 CARNEGIE CENTER, SUITE 300
PRINCETON, NJ 08540
On behalf of Defendant Karamjeet Singh, also known as Ricky
HILLMAN, District Judge
This case involves claims concerning the illegal trafficking
of wireless phones overseas.
Pending before the Court are two
Plaintiffs, Sprint Solutions, Inc. and Sprint
Communications Company L.P. (hereinafter “Sprint”) have moved to
dismiss the counterclaims lodged against it by Defendant
Karamjeet Singh, also known as Ricky Singh.
Defendant Frank J.
Altamura has moved to dismiss four counts in Sprint’s complaint
against him for Sprint’s failure to properly plead those counts
in accordance with Federal civil Procedure Rules 9(b) and
For the reasons expressed below, Sprint’s motion will
be granted, and Altamura’s motion will be denied.
Sprint sells wireless handsets and other mobile devices
under various brands, including, Sprint, Sprint Prepaid, Boost
Mobile, Virgin Mobile, payLo, and Assurance Wireless, for use on
Sprint’s wireless network at prices significantly below the
wholesale price of the phones to make them more widely accessible
Briefly summarized from Plaintiff’s 48-page
Complaint, Defendants J&S Investments of Delaware, Inc. d/b/a
Cellusales, Sarabjit Singh a/k/a Sam Singh, Frank J. Altamura,
and Karamjeet Singh a/k/a Ricky Singh, as well as other coconspirators, are perpetrators of an unlawful scheme to profit
from the illegal acquisition and resale of new Sprint wireless
handsets by stealing the substantial financial investment that
Sprint makes in its phones, for their own profit and to the
detriment to Sprint and its customers. 1
Sprint’s Complaint details the alleged mobile phone trafficking
scheme. Defendants and their co-conspirators acquire new Sprint
phones through various methods, including the use of “runners”
(an individual or entity that makes multiple purchases of new
Sprint phones on behalf of phone traffickers) and “credit mules”
(an individual or entity that signs up for wireless service with
Sprint – never intending to comply with the terms of the
agreement – to obtain new subsidized Sprint phones for phone
traffickers). As part of the scheme, the phones, which may be
purchased and sold multiple times, ultimately end up in the
hands of someone other than the consumer with whom Sprint has a
business relationship, and the phones are “unlocked” so they
will operate on wireless networks other than Sprint. Often the
ultimate user of the phone is located overseas, in a country
Defendant Cellusales was initially identified as a potential
trafficker through its profile on the online marketplace CellPex,
offering new iPhones for sale.
Sprint’s undercover investigators
responded to the advertisement and contacted Defendant Sam Singh,
who is Cellusales’s Director of Global Distribution.
At an in
person meeting on January 13, 2016, Sam Singh confirmed to the
investigator that Defendants are handset traffickers who acquire
new phones in bulk that are unlocked and exported for resale
During its investigation, Sprint learned, inter alia,
that Defendants were actively looking to enter into an open
purchase order to buy 2,000 new Sprint phones per week, all of
which they confirmed would be unlocked and exported, to be used
where the wireless service provider does not underwrite the cost
of new phones. The scheme takes advantage of the fact that
Sprint invests in its phones to reduce the costs for its
consumers; whereas wireless service providers in other countries
do not. By obtaining the new Sprint phones under false or
fraudulent pretenses from Sprint and reselling or diverting them
to other markets where phones are not subsidized, the scheme
converts Sprint’s investment dollars into profits for Defendants
and their co-conspirators. In addition to the pecuniary losses
caused by Defendants’ theft of Sprint’s mobile devices,
investment in the phones, lost sales and market expenses, and
lost expected customer revenue, Defendants’ misconduct has
harmed Sprint’s relationships with its customers, dealers,
retailers, and others. Defendants’ scheme also involves
unlawfully accessing Sprint’s protected computer systems and
wireless network; trafficking of Sprint’s protected and
confidential computer passwords; willful infringement of
Sprint’s trademarks; and/or stealing legitimate customer
upgrades, causing substantial damage to Sprint’s brand, image,
and reputation. (See Docket No. 1 at 2-3.)
on wireless networks other than Sprint.
Accordingly, Sprint filed the instant suit against
Defendants for common law and statutory unfair competition,
tortious interference with existing and prospective business
relations and existing contract, conspiracy to commit fraud and
fraudulent misrepresentation, unjust enrichment, common law fraud
and fraudulent misrepresentation, violations of the Computer
Fraud and Abuse Act (“CFAA”), trademark infringement and false
advertising under the Lanham Act, contributory trademark
infringement, conversion, and violations of the New Jersey
Computer Fraud and Abuse Act.
The Complaint seeks monetary
damages, attorneys’ fees and costs, and injunctive relief.
Defendants, through previous counsel, filed their Answers
to Sprint’s Complaint, denying Sprint’s claims.
In his Answer,
Defendant Ricky Singh lodged two counterclaims against Sprint “False and Malicious Allegations” and “Frivolous Litigation.” 2
Sprint has moved to dismiss those counterclaims, arguing that
they are not cognizable claims.
Singh has opposed Sprint’s
Even though Defendant Frank J. Altamura filed an Answer to
Ricky Singh also filed cross-claims against his co-defendants,
but he has since voluntarily dismissed those cross-claims.
(Docket No. 18.)
Sprint’s Complaint, Altamura’s current counsel has moved to
dismiss four counts in Sprint’s Complaint against him.
also asks that the Court permit him to file an amended Answer
after the resolution of his motion to dismiss.
opposed Altamura’s motion as procedurally improper, but Sprint
also argues that if Altamura’s motion is considered by the Court,
it should be denied because Sprint’s claims against Altamura are
properly pleaded and substantively viable.
Subject Matter Jurisdiction
This Court has jurisdiction over this matter under 28 U.S.C.
§§ 1331 and 1338 because Sprint’s claims for violation of the
United States Trademark Act, Title 15 of the United States Code
and the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, et seq.
arise under federal law. 3
This Court has supplemental
Sprint states that subject matter jurisdiction also exists
under 28 U.S.C. § 1332 because complete diversity of citizenship
exists between Plaintiffs and Defendants. Subject matter
jurisdiction under § 1332 has not been established, however,
because the citizenship of Plaintiff Sprint Communications
Company L.P. is not properly pleaded. Sprint’s Complaint avers
that Sprint Communications Company L.P. is a Delaware limited
partnership with its principal place of business in Overland
Park, Kansas, but the citizenship of all the partners in a
limited partnership must be provided for diversity jurisdiction.
Swiger v. Allegheny Energy, Inc., 540 F.3d 179, 182 (3d Cir.
2008). Because this Court has subject matter jurisdiction under
§ 1331, whether jurisdiction exits under § 1332 is not material
at this time.
jurisdiction pursuant to 28 U.S.C. § 1367 over Sprint’s state law
claims because those claims are so related to the federal claims
that they form part of the same case or controversy.
Standard for Motion to Dismiss
When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure 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 plaintiff.
Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005).
It is well
settled that a pleading is sufficient if it contains “a short
and plain statement of the claim showing that the pleader is
entitled to relief.”
Fed. R. Civ. P. 8(a)(2).
liberal federal pleading rules, it is not necessary to plead
evidence, and it is not necessary to plead all the facts that
serve as a basis for the claim.
F.2d 434, 446 (3d Cir. 1977).
Bogosian v. Gulf Oil Corp., 562
However, “[a]lthough the Federal
Rules of Civil Procedure do not require a claimant to set forth
an intricately detailed description of the asserted basis for
relief, they do require that the pleadings give defendant fair
notice of what the plaintiff’s claim is and the grounds upon
which it rests.”
Baldwin Cnty. Welcome Ctr. v. Brown, 466 U.S.
147, 149-50 n.3 (1984) (quotation and citation omitted).
A district court, in weighing a motion to dismiss, asks
“‘not whether a plaintiff will ultimately prevail but whether
the claimant is entitled to offer evidence to support the
Bell Atlantic v. Twombly, 550 U.S. 544, 563 n.8 (2007)
(quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in
Twombly expounded the pleading standard for ‘all civil actions’
. . . .”); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009) (“Iqbal . . . provides the final nail-in-the-coffin for
the ‘no set of facts’ standard that applied to federal
complaints before Twombly.”).
Following the Twombly/Iqbal standard, the Third Circuit has
instructed a two-part analysis in reviewing a complaint under
First, the factual and legal elements of a claim
should be separated; a district court must accept all of the
complaint's well-pleaded facts as true, but may disregard any
S. Ct. at 1950).
Fowler, 578 F.3d at 210 (citing Iqbal, 129
Second, a district court must then determine
whether the facts alleged in the complaint are sufficient to
show that the plaintiff has a “‘plausible claim for relief.’”
Id. (quoting Iqbal, 129 S. Ct. at 1950).
A complaint must do
more than allege the plaintiff's entitlement to relief.
see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d
Cir. 2008) (stating that the “Supreme Court's Twombly
formulation of the pleading standard can be summed up thus:
‘stating . . . a claim requires a complaint with enough factual
matter (taken as true) to suggest’ the required element.
‘does not impose a probability requirement at the pleading
stage,’ but instead ‘simply calls for enough facts to raise a
reasonable expectation that discovery will reveal evidence of’
the necessary element”).
A court need not credit either “bald
assertions” or “legal conclusions” in a complaint when deciding
a motion to dismiss.
In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410, 1429-30 (3d Cir. 1997).
The defendant bears the
burden of showing that no claim has been presented.
U.S., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages,
Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).
A court in reviewing a Rule 12(b)(6) motion must only
consider the facts alleged in the pleadings, the documents
attached thereto as exhibits, and matters of judicial notice.
S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd.,
181 F.3d 410, 426 (3d Cir. 1999).
A court may consider,
however, “an undisputedly authentic document that a defendant
attaches as an exhibit to a motion to dismiss if the plaintiff’s
claims are based on the document.”
Pension Benefit Guar. Corp.
v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.
If any other matters outside the pleadings are presented
to the court, and the court does not exclude those matters, a
Rule 12(b)(6) motion will be treated as a summary judgment
motion pursuant to Rule 56.
Fed. R. Civ. P. 12(b).
Plaintiffs’ motion to dismiss Defendant Ricky
Singh’s counterclaim complaint contends that even though
Singh was a one-time shareholder of J&S Investments, he sold his
shares to co-defendant Sarabjit Singh because he had been
severely ill prior to the alleged conduct by Defendants, and he
had no involvement in the alleged scheme.
Sprint’s counsel of this, Singh claims that Sprint is
frivolously pursuing its baseless case against him, to his great
Singh alleges that Sprint’s conduct constitutes
“False and Malicious Allegations” (Count One), and “Frivolous
Litigation” (Count Two) under New Jersey state court R. 1:4-8
and N.J.S.A 2A:15-59.1, New Jersey’s Frivolous Litigation
Sprint has moved to dismiss Singh’s counterclaims because
they are not cognizable claims, at least as they are currently
The Court agrees.
The argument and factual content
of Singh’s counterclaim complaint may serve as the basis for a
motion filed under Federal Civil Procedure Rules 11 (sanctions),
12 (defenses and objections), 56 (summary judgment) or any other
relevant Federal and Local Civil Procedure Rule, but the
malicious prosecution claim is premature, and the frivolous
litigation claim cannot serve as stand-alone claim.
Property Co., Inc. v. Landau, 388 A.2d 1265, 1266 (N.J. 1978)
(“It is not appropriate to institute a suit or file a
counterclaim until the litigation has terminated in favor of the
party who asserts the malicious prosecution cause of action.”);
Marenbach v. City of Margate, 942 F. Supp. 2d 488, 496 (D.N.J.
2013) (citing N.J.S.A 2A:15–59.1; Fed. R. Civ. P. 11) (“One
requirement of the sanctions provisions is that the party
seeking sanctions must file an independent motion or
application, separate from any substantive motion that party
Consequently, Singh’s counterclaims as they are
currently pleaded must be dismissed. 4
One detriment Singh alleges he has suffered by Sprint’s lawsuit
is that his business relationship with Verizon Wireless was
terminated due to this lawsuit. Verizon’s May 1, 2016
termination letter attached to Singh’s counterclaim shows that
Verizon terminated their relationship “without cause” as of
April 1, 2016, which it was contractually permitted to do.
(Docket No. 18-1.) Verizon also states that because of the
allegations in the Sprint lawsuit, it had grounds for a “with
cause” termination “had the agent agreements between Verizon
Wireless and [Singh] remained in effect after April 1, 2016,
which they did not.” (Id.) Even if Verizon’s termination of
its business relationship with Singh was related to the
Defendant Altamura’s Motion to Dismiss Counts
III, IV, V, and XII of Sprint’s Complaint
Defendant Frank Altamura has moved to dismiss four counts
in Sprint’s Complaint:
Count Three (Conspiracy to Commit Fraud)
and Count Five (Common Law Fraud) for failing to meet the
pleading requirements of Rule 9(b), and dismiss Count Four
allegations in Sprint’s lawsuit, Singh does not allege that
Sprint filed its suit against Singh in order to interfere with
his relationship with Verizon or any other business
relationship. That is a key distinction between a “malicious
prosecution” type of claim and an “abuse of process” type of
claim, if Singh intended to advance such a claim. See LoBiondo
v. Schwartz, 970 A.2d 1007, 1022 (N.J. 2009) (“Malicious use of
process is one of a group of closely related torts that,
although ancient in origins, are treated with great caution
because of their capacity to chill resort to our courts by
persons who believe that they have a criminal complaint or civil
claim against another.”); Read v. Profeta, 2017 WL 123438, at *3
(D.N.J. January 11, 2017) (expressing that the court was “wary
of any expansive interpretation that would routinely permit a
defendant to take ordinary denials in its Answer and weaponize
them as a tort counterclaim,” and dismissing abuse of process
claim because the plaintiff had no collateral agenda by filing
his suit against defendant, and there was no indication that
litigation was instituted as an indirect means of harming a
business competitor who is not a party to the action); id.
(“Malicious abuse of process . . . consists in the abuse of the
court's processes after the filing of a civil complaint. It does
not have favorable termination as an element [as does a
malicious prosecution claim].”); Yogo Factory Franchising, Inc.
v. Ying, 2014 WL 1783146, at *12 (D.N.J. May 5, 2014)
(dismissing counterclaim for malicious use of process because
the claims against the defendant had “not yet been determined or
otherwise terminated in her favor” and dismissing counterclaim
for malicious abuse of process because “Defendant's claim is not
for the misuse of any subsequently issued process, but rather
for the filing of a claim against her at all”). Accordingly,
even construing Singh’s counterclaim to be one for abuse of
process, his allegations do not support such a claim.
(Unjust Enrichment) and Count Twelve (Conversion) for failure to
state a claim pursuant to Rule 12(b)(6).
Sprint has opposed Altamura’s motion on two bases.
Sprint argues that Altamura is procedurally barred from filing
his motion pursuant to Rule 12(b)(6).
Second, if the Court
should consider Altamura’s motion, Sprint argues that its claims
against Altamura have been properly pleaded and may stand.
Whether Altamura’s motion is procedurally
As to Sprint’s first argument, the Court finds that
Altamura’s motion may be considered under the procedural history
of this case.
Sprint has set forth the following timeline of
Defendant was served with the Complaint in this action
on March 17, 2016.
Defendant filed an Answer and Affirmative
Defenses on May 16, 2016.
Defendant then served, but did not
file, two Amended Answers and Affirmative Defenses on Sprint on
May 12th and May 13th.
counsel in this matter.
On June 2, 2016, Altamura obtained new
On June 6, 2016, Sprint moved to strike
Defendant’s affirmative defenses.
During the initial scheduling
conference held on June 14, 2016, counsel for Altamura’s codefendants requested additional time to respond to Sprint’s
Motion to Strike the Affirmative Defenses.
In response to the
Court’s inquiry as to whether Altamura would need more time, his
new counsel indicated that he would be seeking leave to file an
amended answer with new affirmative defenses.
The Court granted
Altamura’s request to file an amended answer no later than July
In lieu of filing an amended answer, however,
Altamura filed a motion to dismiss pursuant to Rule 12(b)(6).
Sprint argues that such a motion is not proper because
Altamura has already filed an Answer to its Complaint, and
motions filed pursuant to Rule 12(b)(6) must be filed prior to
answering a complaint.
Sprint also argues that when new counsel
for Altamura was granted leave to file an amended Answer,
Sprint’s acquiesce to that request was based on counsel’s
representation that it would be filing an amended Answer, and
not a motion to dismiss.
Sprint further argues that Altamura’s
motion cannot be considered filed under Rule 12(c), even though
the standard of review for a Rule 12(c) motion is the same as a
Rule 12(b)(6) motion, because the pleadings are not yet closed
due to Altamura’s yet-to-be-filed amended Answer.
asked not only for the denial of Altamura’s motion, but also for
attorney’s fees arising out of its efforts to oppose the motion.
In response, Altamura argues that as a matter of judicial
economy and common sense, his motion should be considered as to
Altamura argues that Rule 12(h) contemplates the
scenario of a defendant presenting a motion to dismiss after an
answer has been filed because his answer contains the
affirmative defense of failure to state a claim. 5
points out the following:
Requiring Altamura to file an Amended Answer before
deciding the instant motion, however, will only needlessly
delay the adjudication of the present motion and require
further additional, amended pleadings. Altamura filed the
instant motion prior to filing his Amended Answer out of
consideration for efficiency and conservation of resources.
Should the Court dismiss any portion of Plaintiffs’
Complaint for failure to state a claim and/or failure to
satisfy the pleading requirements of Rule 9(b), Altamura’s
Amended Answer will necessarily reflect those changes.
Moreover, the outcome of the instant motion impacts the
counter and third-party claims to be brought by Altamura.
The alternative, as advocated by Sprint, would be for
Altamura to file an Amended Answer, then re-file the
present motion, then file a motion for leave to file a
Second Amended Answer, and then ultimately file a Second
Amended Answer. In that case, the end result would be the
same, just with added delay, expense, and use of judicial
resources. Since the matter has already been fully briefed,
the better approach would be to decide the instant motion
and, thereafter, allow Altamura to file its Amended Answer.
(Docket No. 58 at 4.)
The Court agrees with Altamura.
As the Third Circuit
explained, the differences between Rules 12(b), 12(c), and 12(h)
are purely procedural: (1) a Rule 12(b) motion to dismiss a
complaint must be filed before any responsive pleading; (2) a
Rule 12(c) motion for judgment on the pleadings may be filed
Rule 12(h) provides in relevant part, “Failure to state a claim
upon which relief can be granted . . . may be raised: (A) in any
pleading allowed or ordered under Rule 7(a); (B) by a motion
under Rule 12(c); or (C) at trial.” Fed. R. Civ. P. 12(h)(2).
after the pleadings are closed; and (3) a Rule 12(h)(2) provides
that a defense of failure to state a claim upon which relief can
be granted may also be made by a motion for judgment on the
Turbe v. Government of Virgin Islands, 938 F.2d 427,
428 (3d Cir. 1991).
For any of the three Rule 12 motions, the
same standards as under Rule 12(b)(6) are applied.
even though Sprint is generally correct that a motion to dismiss
filed under Rule 12(b)(6) is procedurally faulty if such a
motion is filed after an answer, Rules 12(c) and 12(h) permit
the filing of the functional equivalent of a motion to dismiss
after an answer is filed.
Thus, the Court will apply the Rule
12(b)(6) standard to Altamura’s motion, and consider it as
having been filed under Rule 12(h). 6
If Altamura had filed his motion to dismiss prior to filing his
Answer, after resolving that motion, the Court would have
directed Altamura to file his Answer in accordance with the
Court’s decision. This is because Altamura has moved to dismiss
only four of Sprint’s claims against him, and Altamura will
remain in the case regardless of the outcome of his motion. The
same result will occur here, with the only difference being that
Altamura has affirmatively requested that he be permitted to
craft this Answer in response to the Court’s decision. Perhaps
Sprint’s argument would be more compelling if Altamura were
seeking the dismissal of all of Sprint’s claims against him, but
the Court finds that Rule 12(c) would then apply because
Altamura would be essentially resting on his current Answer.
Rule 12(h) would also still apply. Moreover, in that scenario,
the Court would have the alternative of construing Altamura’s
motion as one for summary judgement under Rule 56, which does
not contain the same Rule 12 procedural limitations - i.e., a
summary judgment motion may be filed pre- or post-answer. See
Whether Counts Three, Four, Five and Twelve
should be dismissed
Count Three (Conspiracy to Commit
Fraud) and Count Five (Common Law Fraud)
Altamura argues that Sprint has failed to meet the pleading
requirements of Rule 9(b) for its claims for fraud and
conspiracy to commit fraud.
For allegations sounding in fraud,
Rule 9(b) imposes a heightened pleading standard: “‘[A] party
must state with particularity the circumstances constituting
fraud or mistake,’” but “‘[m]alice, intent, knowledge, and other
conditions of a person's mind may be alleged generally.’”
Wiley & Sons, Inc. v. Rivadeneyra, 179 F. Supp. 3d 407, 411
(D.N.J. 2016) (quoting Fed. R. Civ. P. 9(b)).
circumstances of the fraud must be stated with sufficient
particularity to put a defendant on notice of the ‘precise
misconduct with which [it is] charged.’”
Id. (quoting Lum v.
Bank of Am., 361 F.3d 217, 224 (3d Cir. 2004)).
this standard, the plaintiff must plead or allege the date, time
Fed. R. Civ. P. 56(b) (“Unless a different time is set by local
rule or the court orders otherwise, a party may file a motion
for summary judgment at any time until 30 days after the close
of all discovery.”). Thus, even though Sprint was under the
impression that Altamura was going to file an amended Answer and
the case proceed from there, the Rules permit Altamura to
challenge the sufficiency of Sprint’s claims by way of a motion
to dismiss under this procedural posture. Accordingly, Sprint
is not entitled to its attorney’s fees resulting from its
opposition to Altamura’s motion.
and place of the alleged fraud or otherwise inject precision or
some measure of substantiation into a fraud allegation.’”
(quoting Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir.
A claim of common law fraud under New Jersey law requires:
(1) a material misrepresentation of a presently existing or past
fact; (2) knowledge or belief by the defendant of its falsity;
(3) an intention that the other person rely on it; (4)
reasonable reliance thereon by the other person; and (5)
Id. (citing Gennari v. Weichert Co.
Realtors, 148 N.J. 582, 611, 691 A.2d 350 (1997)).
must plead facts showing who made a misrepresentation to whom,
as well as the general content of the misrepresentation, in
order to satisfy Rule 9(b).
Id. (citing Lum, 361 F.3d at 224).
A claim for conspiracy to defraud must also be pled with
specificity under Rule 9(b).
Id. (citation omitted).
Jersey law, a civil conspiracy is “‘a combination of two or more
persons acting in concert to commit an unlawful act, or to
commit a lawful act by unlawful means, a principal element of
which is to inflict a wrong against or injury upon another, and
an overt act that results in damage.’”
Id. (quoting Banco
Popular N. Am. v. Gandi, 184 N.J. 161, 177, 876 A.2d 253
The necessary elements of a civil conspiracy are: (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 a lawful purpose to be achieved by unlawful
means; and (4) special damages.
Id. at 412 (citing Morganroth &
Morganroth v. Norris, McLaughlin & Marcus, P.C., 331 F.3d 406,
414 (3d Cir. 2003)).
The Court finds that Sprint’s fraud and conspiracy to
commit fraud claims meet the Rule 9(b) standard.
allegations of Altamura’s fraud, and the conspiracy between all
the defendants to commit fraud, are detailed in a span of over
eight pages in Sprint’s Complaint.
The Court does not need to
recite all of Sprint’s allegations to support this finding, but
briefly summarized, Sprint explains in detail how the three
defendants, individually and conspiratorially, interacted with
Sprint’s undercover investigator in order to purchase hundreds
of subsidized Sprint iPhones to be unlocked and diverted
(See Docket No. 1 at 11-19.)
With regard to Sprint’s claims specifically directed at
Altamura, Sprint relates Altamura’s meeting with the
investigator via Skype, and alleges that Altamura (1) “revealed
that he has been in the cell phone business for 30 years and
inquired about the source of the Sprint Phones the investigator
was selling to Defendants”; (2) “[h]e was familiar with both
runners and upgrade and add-a-phone fraud”; (3) “Alt[a]mura and
Sam Singh stressed that Defendants’ buyer was adamant that the
phones be locked to Sprint so that Defendants could have them
unlocked and that the Phones were going overseas”; and (4)
“Defendants reiterated their request for ESNs and stated that
they could make payment for each delivery of new Sprint Phones
within 24-48 hours.”
(Id. at 13, ¶ 44.)
A few days later,
Sprint alleges that Alt[a]mura revealed “that while all of the
Phones were going overseas, Defendants needed the Phones to be
denominated ‘Clean’ in Sprint’s system for a period of time to
allow Defendants time to unlock the Phones using their preferred
(Id. at 14, ¶ 48.)
Then, on January 29, 2016, “after speaking with Defendants
Altamura and Sam Singh regarding the new buyer, Defendants sent
the investigator a purchase order for the 100 new Sprint Phones.
Defendants explained that an unnamed co-conspirator unlocks
their new Sprint Phones for them within 72 hours and stated that
they will wire the funds within 72 hours of the Phones being
(Id. at 15, ¶ 51.)
On February 1,
2016, prior to being served with Sprint’s cease and desist
letter, Sprint alleges “Sprint’s investigator returned to
Defendants’ office in Mt. Laurel, New Jersey where he met with
Defendant Sam Singh and they spoke with Defendant Alt[a]mura by
The office in which the investigator waited, with a
representative of Defendants present, contained shipping boxes
addressed to Defendant Ricky Singh at CelluSales.
Alt[a]mura told the investigator that Defendants now had
multiple buyers who wanted Sprint Phones in such large
quantities that they would be willing to buy Phones that were
procured by runners or credit mules.
Before departing, the
investigator provided Defendants a sample of 10 new Sprint
Phones as a partial delivery on the first order.” 7
(Id. at 15, ¶
Altamura has denied that his actions were for anything
other than legitimate business transactions.
That denial at the
motion to dismiss stage, however, does not mean that Sprint has
not pleaded plausible fraud and conspiracy to commit fraud
claims against him.
Sprint’s allegations against Altamura
satisfy Rule 9(b)’s requirement that a plaintiff must “plead
with particularity the circumstances of the alleged fraud in
order to place the defendants on notice of the precise
misconduct with which they are charged, and to safeguard
defendants against spurious charges of immoral and fraudulent
Seville Indus. Mach. Corp. v. Southmost Mach. Corp.,
These phones were returned to Sprint by Defendants’ former
742 F.2d 786, 791 (3d Cir. 1984)), abrogated in part on other
grounds by Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)
(explaining that “[i]t is certainly true that allegations of
‘date, place or time’ fulfill these functions, but nothing in
the rule requires them. Plaintiffs are free to use alternative
means of injecting precision and some measure of substantiation
into their allegations of fraud.”).
The Complaint is clear that
Sprint alleges that Altamura was in the business of illegally
trafficking phones, which constitutes fraud, and he acted in
concert with his co-defendants.
Altamura also argues that Sprint’s fraud claims fail
because the transaction between Sprint’s investigator and
Defendants was never consummated.
Without Defendants having
actually purchased Sprint phones and trafficked those phones
overseas, Altamura argues that Sprint cannot establish that it
has suffered any damages, which is fatal to Sprint’s fraud
Altamura’s argument is too narrow of an interpretation of
Sprint’s fraud claims.
The Complaint alleges that Sprint became
aware in June 2015 that Defendants could be potential
traffickers by purchasing, unlocking, and then illegally selling
Sprint phones to be used on networks other than Sprint’s.
order to find out if they were illegal phone traffickers, Sprint
used an undercover investigator to contact Defendants and
arrange the sale of “clean” Sprint phones to be unlocked by
Sprint’s investigator also learned that Defendants
intended to send those phones overseas.
investigator provided the Electronic Serial Number (ESN) for 100
phones, Defendants illegally unlocked those phones even without
having possession of them.
Simply because Sprint did not follow
through after that point and permit itself to be defrauded by
allowing the trafficking to take place does not preclude Sprint
from maintaining its fraud claims.
Based on its undercover investigation, Sprint obtained
sufficient evidence to believe that Defendants have illegally
trafficked phones, and sufficient evidence to believe they have
trafficked Sprint phones, and were intending to further traffic
Sprint phones, suffering various damages of as a result, such as
theft of Sprint’s financial investments in its new Phones, harm
to Sprint’s brand, image, and reputation, harm to Sprint’s
relationships with its dealers, retailers, and customers, and
infringement to its trademarks, which causes consumer confusion.
“Courts must be sensitive to the fact that application of
Rule 9(b) prior to discovery may permit sophisticated defrauders
to successfully conceal the details of their fraud,” and “courts
have relaxed the rule when factual information is peculiarly
within the defendant's knowledge or control.”
Securities Litigation v. Kraftsow, 890 F.2d 628, 645 (3d Cir.
1989) (citation omitted).
Even though these concerns are
present here, Sprint’s claims against Altamura do not require
the relaxation of Rule 9(b), because Sprint’s fraud and
conspiracy to commit fraud claims against Altamura readily meet
the Rule 9(b) standard.
ii. Count Four (Unjust Enrichment) and
Count Twelve (Conversion)
Under New Jersey law, to state a claim for unjust
enrichment, “a plaintiff must allege that (1) at plaintiff's
expense (2) defendant received a benefit (3) under circumstances
that would make it unjust for defendant to retain benefit
without paying for it.”
Volin v. General Electric Company, 189
F. Supp. 3d 411, 422 (D.N.J. 2016) (quotations and citations
At the pleading stage, a plaintiff “need only allege
facts sufficient to show: 1) Plaintiff conferred a benefit on
Defendant; and 2) circumstances are such that to deny recovery
would be unjust.”
Id. (quotations and citations omitted).
The common law tort of conversion in New Jersey is defined
as the “intentional exercise of dominion or control over a
chattel which so seriously interferes with the right of another
to control it that the actor may justly be required to pay the
other the full value of the chattel.”
Chicago Title Ins. Co. v.
Ellis, 978 A.2d 281, 287 (N.J. Super. Ct. App. Div. 2009), cert.
denied, 983 A.2d 1113 (N.J. 2009) (quoting Restatement (Second)
of Torts § 222A(1) (1965)).
Altamura argues the same point for the dismissal of these
claims as he argued for the dismissal of Sprint’s fraud claims:
because Altamura never obtained the phones offered for sale by
Sprint’s investigator, Sprint cannot show that Altamura
converted the phones for his impermissible purpose, or that
Altamura was unjustly enriched by the trafficking of the phones.
Altamura further argues that Sprint’s claims that Altamura in
fact obtained and trafficked Sprint phones are too vague and
conclusory to stand.
Unjust enrichment and conversion claims are cast with a
similar hue as fraud claims, and present the same concerns as to
how a plaintiff may prove such claims when the very nature of
those claims is to conceal a nefarious purpose.
Sprint, at this pleading stage, has not presented concrete proof
that Altamura has in fact trafficked Sprint phones, Sprint’s
allegations concerning the typical phone trafficking scheme,
along with the investigator’s evidence that Altamura and his codefendants were following along the same script as a typical
trafficking scheme, provide the requisite factual basis to
plausibly suggest that Altamura did what Sprint says he did.
Again, Altamura may ultimately prevail if Sprint cannot
substantiate its claims with additional proof developed through
discovery, but Sprint has met the pleaded standard of
Twombly/Iqbal to allow those claims to proceed.
For the reasons stated above, Sprint’s motion to dismiss
the counterclaims by Defendant Ricky Singh will be granted.
Defendant Frank Altamura’s motion to dismiss Count Three, Count
Four, Count Five and Count Twelve will be denied.
shall filed his amended Answer within 15 days of the date of
An appropriate Order will be entered.
Date: January 31, 2017
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?