PRICASPIAN DEVELOPMENT CORPORATION et al v. GONZALEZ et al
Filing
121
OPINION. Signed by Judge Dennis M. Cavanaugh on 10/16/2013. (nr, )
OT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
PRIC \SPI’\N DEVE OPMENT
CORPORATION, JACK GRYNBERG
and GRYNBERG PETROLEUM
CoMPANY
:
Hon. Dennis M. Cavanaugh
OPINION
Plaintiffs,
Civil Action No. 2: 13-cv-00549 (DMC)(JBC)
V.
GERRARDO GONZALEZ, TERESA
C ORC OR \-S( II \l F L R l)LVY
SC HALl FR PAULA S Ii RBFNS
RI I \H I RS MNAGEMENl
GROUP, IN C., BARBARA QUEEN
I/T/F JOHN CARR, MARKETING
DIGEST, INC., TI-IE CIRCLE M
GROUP, INC., CAS SERVICES, INC.,
SMART MONEY, INC., SOVEREIGN
BANK, WELLS FARGO BANK, a
Delaware corporation, f/kla
WACHOVIA BANK, JOHN and JANE
DOES (1-20) AND ABC COMPANIES
(1—10).
Defendants.
I)ENNIS M. CAVANAUGH, U.S.D.J.:
This matter comes before the Court upon the following Motions: i) Motion to Dismiss by
Defendant Teresa Corcoran-Schaefer (“Corcoran-Schaefer”); ii) Motion to Dismiss by
Defendant Devyn Schaefer (“Schaefer”); iii) Motion to Dismiss by Defendant Paula Sterbens
(“Sterbens”); iv) Motion to Dismiss by Defendant CAS Services, Inc. (‘CAS”); v) Motion to
Dismiss by Sovereign Bank (“Sovereign’); vi) Motion to Dismiss by Wells Fargo Bank LWells
Fargo”)’; vii) Cross-Motion to Amend Complaint by Pricaspian Development Corporation.
Jack
Grynberg, and Grynberg Petroleum Company (“Plaintiffs”): and viii) Second Motion to
Amend/Correct Complaint by Plaintiffs. Corcoran-Schaefer, Schaefer. Sterbens. and CAS will
be
referred to as the “Non-Bank Defendants.” Sovereign and Wells Fargo will be referred to as the
“Bank-Defendants.” Pursuant to FED. R. Civ. P 78. no oral argument was heard. Based on the
following and for the reasons expressed herein, the Motions to Dismiss are granted. Plaintiffs’
Cross-Motion to Amend Complaint is denied, and Plaintiffs’ Second Motion to Amend/Correct
Complaint is denied.
L
2
BACKGROUND
Plaintiff’s previously obtained a $3,601 ,947.04 judgment against First Unity, Inc.
First
Unity”). F-Cash. Inc. (“F-Cash”). and Tom Black in the State of Colorado. On or about January
5, 2011. Plaintiffs domesticated this judgment in the State ol New Jersey. Plaintiffs subsequently
filed a Complaint in this Court against William C. Martucci. Yamel Gonzalez. Barbara Queen.
Gary Martucci, Richard Schaefer, Joseph Schaefer, Anthony Sterbens. POS Systems. Inc.. First
Unity, F-Cash, Manufacturers Marketing Group, Inc., United Grocers Clearing House, Inc..
ATM Management, Inc., and ATM Management de Puerto Rico, Inc. (the “Prior Defendants”).
alleging fraudulent transfers, unjust enrichment, and conspiracy to commit money laundering to
hinder Plaintiffs from executing on their judgment against First Unity and E—Cash. Plaintiffs
allege that the Prior Defendants transferred their assets to the Non—Bank Defendants to avoid a
possible levy on these assets by Plaintiffs. Specifically, and relevant to the instant Motions.
Plaintiffs allege that William Martucci opened a number of business accounts at Sovereign to
Plaintiffs have sued “Wells Fargo Bank” as successor to Wachovia Bank’s business obligations. “Wells Fargo” is
used herein to refer to both Wachovia Bank, NA. and Wells Fargo Bank, NA.
2
The facts from this section are taken from the parties’ pleadings.
2
facilitate the transfer of funds to the Non-Bank Defendants. Further, Plaintiffs allege that
William Martucci and Barbara Queen held accounts at Wells Fargo for the same purpose.
Plaintiffs filed a Complaint on January 28,2013, alleging thirteen counts (ECF No. 1).
Counts eight and nine allege civil RICO violations against the Non-Bank Defendants. The
remaining counts allege state law violations. Corcoran-Schaefer and Schaefer filed Motions to
Dismiss on March 12, 2013 (ECF Nos. 33-34). Sterbens filed a Motion to Dismiss on March 19,
2013 (ECF No. 41). CAS filed a Motion to Dismiss on March 22,2013 (ECF No. 44). Sovereign
filed a Motion to Dismiss on April 5,2013 (ECF No. 61). Wells Fargo filed a Motion to Dismiss
on April 8, 2013 (ECF No. 64). Plaintiffs flied an Opposition to Corcoran-Schaefer’s and
Schaefer’s Motions on April 19, 2013 (“Pl.’s Opp’n,” ECF No. 71). Plaintiffs flied an
Opposition to Sterbens’s and CAS’s Motions and a Cross-Motion to Amend Complaint on April
22,2013 (“P1’s Cross-Mot.,” ECF No. 72). Corcoran-Schaefer and Schaefer filed Replies to
Plaintiffs’ Opposition on April 29,2013 (ECF Nos. 74-75). Sterbens and CAS filed Replies to
Plaintiffs’ Opposition and Cross-Motion to Amend on April 29,2013 (ECF No. 76-77). Plaintiffs
filed Oppositions to the Bank Defendants’ Motions on May 6, 2013 (ECF Nos. 83-84).
Sovereign filed a Reply to Plaintiffs’ Opposition on May 13, 2013 (ECF No. 89). Wells Fargo
filed a Reply to Plaintiffs’ Opposition on May 20,2013 (ECF No. 90). Plaintiffs flied a Second
Motion to Amend/Correct Complaint on August 30,2013 (ECF No. 108). The Non-Bank
Defendants collectively flied an Opposition to the Second Motion to Amend/Correct Complaint
on September 23, 2013 (ECF No. ill). The Bank Defendants filed Oppositions to the Second
Motion to Amend/Correct Complaint on September 23, 2013 (ECF Nos. 112, 114). Plaintiffs
filed a Reply to all Opposition to the Second Motion to Amend/Correct Complaint on September
30, 2013 (ECFNo. 116).
3
IL
STANDARD OF REVIEW
A. Motion to Amend Complaint
hederal Rule of Civil Procedure I 5(a)(2) provides that “a party may amend its pleading
only with the opposing party’s written consent or the court’s leave. The court should freely
give
leave when justice
SC)
requires.” Leave to amend is to be freely granted unless there is a reason
for denial, “such as undue delay, bad faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, futility of amendment, etc.” Foman v. Davis,
371
U.S. 178, 182, (1962); see also Arthur v. Maersk, 434 F.3d 196, 204 (3d. Cir. 2006) (“Among
the factors that may justify denial of leave to amend are undue delay, bad faith, and futility”).
“Where an amended pleading would be futile, that alone is sufficient ground to den leave to
amend.” Kanter v. Barella. 489 F.3d 170. 181 (3d. Cir. 2007). “Futilitv’ of amendment is shown
when the claim or defense is not accompanied by a showing of plausibility sufficient to present a
triabLe issue.” Harrison Beverage Co. v. Dribeck Importers, 133 F.R.D. 463. 468 (D.N.J. 1990).
B. l1otion to Dismiss for Failure to State a Claim
In deciding a motion under FED. R. Civ. P. 12(bX6), the District Court is “required to accept
as true all factual allegations in the complaint and draw all inferences in the facts alleged in the
light most favorable to the [plaintifil.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir.
2008). “[Aj complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, a plaintilis
“obligation to provide the grounds’ of his ‘entitle[mentj to relief requires more than labels and
conclusions and a formulaic recitation of the elements of a cause of action will not do.” Id. On a
motion to dismiss, courts are “not bound to accept as true a legal conclusion couched as a fictual
4
allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). A plaintitis complaint is suhect
to the
heightened pleading standard set forth in Ashcroft v. igbal:
To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, to “state a claim to relief that is plausible on its face.” A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged
Determining whether
a complaint states a plausible claim for relief will
be a context-specific task that requires
the reviewing court to draw on its judicial experience and common sense. l3ut where the
well pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged but it has not “show[nl” “that the pleader is
entitled to relief.”
.
.
.
.
.
.
-
-
556 U.S. 662, 678-679 (2009) (quoting Twombly, 550 U.S. at 557, 750).
III.
1)ISCUSSION
A. Motions to Amend Complaint
1) Plaintiffs’ Cross-Motion to Amend Complaint
CAS’s Motion to Dismiss argues that Plaintiffs have failed to state a claim against CAS
because nowhere in the Complaint do Plaintiffilade
a demand for Iudment against CAS.
Indeed, CAS is only mentioned twice in the Complaint
-
once in paragraph nine where it is
identified as a Defendant, and once in paragraph seventy-two where Plaintiffs allege that
“Anthony Sterbens transferred money to his wife, Paula Sterbens. and/or CAS services.” In its
Cross-Motion to Amend Complaint, Plaintiffs assert that it was a scrivener error to exclude CA.S
from paragraph seventeen of the Complaint (P1.’s Cross-Mot. at 1 6-1 7). This paragraph lists the
Defendants that are to be referred to in the remainder of the Complaint as the “Non-Bank
Defendants.” Plaintiffs also claim that it was an error not to include CAS in certain “wherethre”
clauses of the Complaint that seek judgment against the various Defendants
(j. at 17). Plaintiffs
Proposed First Amended Complaint corrects these deficiencies.
CAS asserts that Plaintiffs’ First Amended Complaint is futile because. even if amended.
allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). A plaintiff’s complaint is subject to the
heightened pleading standard set forth in Ashcroft v. lqbal:
To survive a motion to dismiss, a complaint must contain sufficient factual matter. accepted
as true, to ‘state a claim to relief that is plausible on its face.” A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defindant is liable for the misconduct alleged
Determining whether
a complaint states a plausible claim for relief will
be a context-specific task that requires
the reviewing court to draw on its judicial experience and common sense, But where the
well pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged but it has not “show[nj” that the pleader is
entitled to relief.”
.
.
-
-
556 U.S. 662, 678-679 (2009) (quoting Twombly, 550 U.S. at 557, 750).
111.
1)1SCUSSION
A. Motions to Amend Complaint
1) Plaintiffs’ Cross-Motion to Amend Complaint
CAS’s Motion to Dismiss argues that Plaintiffs have failed to state a claim against CAS
because nowhere in the Complaint do Plaintiffs make a demand for judgment against CAS.
Indeed, CAS is only mentioned twice in the Complaint
—
once in paragraph nine where it is
identified as a Defendant, and once in paragraph seventy-two where Plaintiffs allege that
“Anthony Sterbens transferred money to his wife, Paula Sterbens, and/or CAS services.” In its
Cross—Motion to Amend Complaint, Plaintiffs assert that it was a scrivener error to exclude CAS
from paragraph seventeen of the
Complaint
(P1.’ s Cross—IViot. at 1 6—1 7). This paragraph lists the
Defendants that are to be referred to in the remainder of the Complaint as the “Non-Bank
Defendants.” Plaintiffs also claim that it was an error not to include CAS in certain “wherefore”
clauses of the Complaint that seek judgment against the various Defendants (Id. at 1 7). Plaintiffs’
Proposed First Amended Complaint corrects these deficiencies.
CAS asserts that Plaintilts First Amended Complaint is lutile because vcn
it
arnnded
the Complaint does not adequately state a claim against CAS. To support
this assertion, CAS
makes the same arguments that the other Non—Defendants make as to why Plaintiffs
have thiled
to slate a claim. As discussed below, these arguments are compelling. Thus.
ii would be futile to
allov PlaintilTs to amend the Complaint to make the same arguments against
CAS .A eeordinglv.
Plaintiffs’ Cross—Motion to Amend Complaint is denied and CAS’s Motion to l)ismiss
is
granted.
2) Plaintiffs’ Second Motion to Amend/Correct Complaint
In the Second Motion to Amend/Correct Complaint. Plaintiffs seek to add a new
Defendant, PlC, Inc. (“PlC”) and to provide additional factual material, Nothing in
the Proposed
Second Amended Complaint corrects the deticiencies discussed throughout this Opinion.
Further. Plaintiffs’ allegations regarding PlC are scarce and almost entirely limited
to statements
in which PlC is strung together with a number of other Defendants. The main addition occurs
in
paragraph eighty-six of the Complaint where Plaintiffs allege that “PlC in or around August
2008 received and issued money to William Martucci or entities under his control.” This vague
statement does not show that Plaintiffs are able to state a claim against PlC. Accordingly.
Plaintiffs’ Second Motion to Amend/Correct Complaint is denied as futile.
B. Motions to I)ismiss
1) Non-Bank l)efendants
All of the Non-Bank Defendants essentially make the same arguments in their Motions to
Dismiss. Therefore, the Motions will be analyzed together. The Non-Bank Defendants claim
that
counts eight and nine of the Complaint should be dismissed because Plaintiffs have not
adequately stated claims for civil RICO violations. The Non-Bank Defendants assert that once
counts eight and nine are dismissed. the basis lbr suppelemental jurisdiction disappears and thus
6
the state la\v claims must be dismissed absent an independent basis ofjurisdiction.
The NonBank Defendants claim that no such jurisdiction exists, as they do not have sufficient
contacts
with New Jersey.
a) RICO Claims
RICO authorizes the filing of a lawsuit by “[a]nv person injured in his business or
property by reason of a violation of section 1962.” 18 U.S.C.
§
1964(c). Section
1 962(c) provides that it is ‘unlawfu1 for any person employed by or associated with any
enterprise engaged in, or the activities of which affect, interstate commerce, to conduct or
participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern
of
racketeering activity or collection of unlawful debt.” Section 1962(d) provides a cause of action
against persons who conspired to violate the substantive provisions of(a), (b). or (c).
To state a claim under 18 U.S.C.
§
1964(c) and (d), Plaintiffs must show that two
separate entities exist: “(1) a ‘person’: and (2) an enterprise’ that is not simply the same ‘person’
referred to by a different name.” Cedric Kushner Promotions. Ltd. v. King. 533 U.S. I 58. 161
(2001). To prove the existence of an enterprise. Plaintiffs must show: “1) that the enterprise is an
ongoing organization with some sort of framework for making or carrying out decisions; (2) that
the various associates function as a continuing unit; and (3) that the enterprise [isj separate and
apart from the pattern of activity in which it engages.” United States v. Pelullo, 964 F.2d 193,
211 (3d Cir. 1992). The definition of “enterprise” includes “both legal
entities
and illegitimate
associations-in-tact. Rusello v. United States. 464 U.S. 15, 24 (1983).
The Non-Bank Defendants argue that Plaintiffs Complaint fails because it does not
distinguish between the RICO person and the RICO enterprise. Plaintiffs assert that “[e]ach
individual [Diefendant in this matter is the RICO person while the association of all
7
I Djefëndants is the RICO enterprise” and that each individual
iI•:)m
Defendant is separate and distinct
the enterprise (P1’s Opp’n at 6—7). 1-Towever. to allege the existence of an enterprise.
Pluintift’ Complaint simply states that the “ion—Bank Defendants were members of an
enterprise and/or associated with an enterprise that engaged in a pattern of racketeering to
conceal money and/or monetary instruments for the benefit of Non-Bank Defendants or entities
under their control” (Compl.
¶ 70). This conclusory statement suffers from the same problems
that were present in Giles v. Volvo Trucks N. Am., where the court stated the following:
Plaintiff has not adequately pleaded [the] elements of a civil RICO claim. For
example. Plaintiffs only reference to an “enterprise” is his conclusorv statement
that he has “established that an enterprise exists that undeniably effects interstate
commerce” simply by naming VTNA. “an enterprise to which [the Defendanisi
helong[ ].“ Plaintiff has not in any meaningful way described the relationship olthe
Defendants to one another, nor has he made allegations that they were aware of the
existence of their “enterprise” and involvement therein.
55 1 F. Supp. 2d 359, 368 (M.D. Pa. 2008) (internal citation omitted); gg also McCullough v.
Zimmer. Inc., 382 F. App!x 225. 231 (3d Cir. 2010) ‘Simply listing a string of individuals or
entities that engaged in illegal conduct, without more, is insufficient to allege the existence of a
RICO enterprise.”); In re Ins. Brokerage Antitrust Litig., No. 04-5184, 2007 WL 1062980, at *8
(RN J. Apr. 5, 2007) (stating that “courts should reject assocationin—iact enterpnse a.l legations
which are imprecise. vague, conclusory, and lack both clarity and any degree of specificity”).
Further, even if Plaintiffs’ Complaint sufficiently pleaded the existence of an enterprise,
Plaintiffs have not alleged facts to show that this enterprise was separate from the pattern of
activities allegedly engaged in by the Non-Bank Defendants. Plaintiffs argue that “because the
individual {D]efendants engaged in illicit money transfers, the RICO person and the RICO
enterprise are not the same” (Pl.’s Opp’n at 8’). Even if this is true, it does not cure the tict that
Plaintiffs have not shown that the enterprise has an independent purpose apart from the criminal
actions purportedly taken by the Non-Bank Defendants. gg McCullough, 382 F. Appx at 232
8
(affirming the District Courts’ dismissal of the piaintiffs complaint because “they [did not]
allege[] facts that would support an inference that [the] alleged enterprise had any structure or
existence separate and apart from [the d]efendant& alleged criminal conduct”). Accordingly,
Counts eight and nine of the Complaint are dismissed,
b)
Jurisdiction
Because this Court has decided that Plaintiffs’ federal claims must be dismissed. it must
decide whether it has jurisdiction over the remaining state law claims. Plaintiffs assert that
diversity jurisdiction exists. The Non-Bank Defendants. however, each argue that they do not
have sufficient contacts with New Jersey to warrant personal jurisdiction. Because each NonDefendant makes the same arguments regarding lack of personal jurisdiction, and Plaintiffs make
the same arguments in response to each Non-Bank Defendant, this Court will analyze the
arguments ol all the Non-Bank Defendants together.
The question of whether diversity jurisdiction exists “is determined by examining the
citizenship of the parties at the time the complaint was filed.” Midlantic Nat. T3ank v. Hansen, 48
F.3d 693, 696 (3d Cir. 1995). In cases based on diversity jurisdiction, federal courts have
personal jurisdiction over non-resident defendants, “to the extent permissible under the state law
of the jurisdiction where the court sits.” Irouvel: Capital Partners. L .P. v.HealthcareAcqjition.
Inc o Cl\
\ 99 335 2000 \\ I 31 1029 at 2 (E D Pa M
ii
24 2000)
(quotIng (ji
md
Entertainment Group. Ltd. v. StarMedia Sales. Inc., 988 F.2d 476. 481 (3d Cir.1993)). Therefore.
personal jurisdiction over the Non-Bank Defendants is determined by New Jersey’s “long-arm”
statute. Starline Optical Corp. v. Caidwell, 598 F. Supp. 1023, 1025 (D.N.J. 1984). New Jersey
courts “have construed this rule to permit jurisdiction to the outer limits permitted by the due
process clause of the United States Constitution.” Id. (citations omitted). If a defendant is not
9
present in New Jersey when served. it must have certain “minimum contacts with the state.
“In the context of specitc jurisdiction, the minimum contacts inquiry must focus on ‘the
relationship among the defendant, the forum, and the litigation.” Lebel v. Everglades Marina.
Inc., 558 A.2d 1252, 1255 (N.J. 1989) (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)).
Essentially, this Court must ask whether the Non-Bank Defendants’ “conduct and connection
with [New Jersey] are such that [they] should reasonably anticipate being haled into
court
[herd.” Id. (quoting World-Wide Volkswagen Corp. v. Woodson. 444 U.S. 286. 297 (1 980)).
In the present case, the Complaint alleges that Plaintiffs
Bank Defendants reside in New York (Compi.
J{ 4, 6-9).
reside
in Colorado and all Non-
Plaintiffs claim that the Non-Bank
Defendants have minimum contacts with New Jersey because they “illicitly received transfers of
assets from [the Prior Defendants] that originated from First Unity and F-Cash and were located
in New Jersey” (Pl.’s Opp’n at 14). Therefore, Plaintiffs argue, “[b]v concealing assets from the
reach of Plaintiffs’ judgment execution, the [Non-Bank I)efendants’] conduct had efiècts’ in
New Jersey” (Id.). First, Plaintiffs’ Complaint does not adequately assert diversity jurisdiction, as
Plaintiffs have only listed the residences of the parties as opposed to the citizenships, See Smith
3
v. Wildwood Linen, No. CIV 09-65 12, 2010 WL 2674503, at *2 (D.N.J. June 30, 2010)
(“Allegations of residence are insufficient for purposes of establishing jurisdiction under
§
1332.”); Guar. Nat. Title Co., Inc. v. J.E.G. Associates. 101 F.3d 57, 59 (7th Cir. 1996) (“When
the parties allege residence but not citizenship, the court must dismiss the suit.”), Further. even i f
Plaintiffs did properly allege that the Non-Bank Defendants are citizens of New York and
Plaintiffs are citizens of Colorado, they have not shown that the Non-Bank Defendants have
This Court notes that because CAS is a corporation, Plaintiffs do properly allege that CAS has its principal place
business in New York. However, as discussed further in the Opinion, Plaintiffs have not shown that CAS has
sufficient minimum contacts with New Jersey. Additionally, neither proposed Amended Complaint corrects the
failure to allege the citizenships of Corcoran-Shaefer, Shaefer. and Sterbens.
10
of
sufficient minimum contacts with New Jersey. Plaintiffs have not pleaded the existence of any
acts taken by the Non-Bank Defendants that show purposeful availment of New Jersey. Plaintiffs
essentially argue that because the Non-Bank Defendants illicitly received funds from the Prior
Defendants, and because these funds originated in New Jersey, the Non-Bank Defendants have
minimum contacts with New Jersey. However, not only is this connection attenuated, but the
Complaint is void of any allegations of acts taken by the Non-Bank Defendants that were
directed towards New Jersey. Accordingly, Plaintiffs’ state law claims against the Non-Bank
Defendants are dismissed.
2) Bank Defendants
Counts ten and twelve of the Complaint allege that the Bank Defendants aided and
abetted the illicit money transfers and/or cash withdrawals by William Martucci and/or Barbara
Queen. Counts eleven and thirteen allege that the Bank Defendants breached their duty to
reasonably inform regulatory authorities of the illicit money transfers and/or cash withdrawals.
Although both Bank Defendants argue that Plaintiffs have failed to state claims upon which
relief can be granted, only Sovereign argues that Plaintiffs have failed to meet the appropriate
statute of limitations. However, because this Court finds that Plaintiffs have failed to state their
claims, the statute of limitations argument need not be addressed. Therefore, this Court will
analyze the claims against the Bank Defendants together.
a) Aiding and Abetting Claims
To state a claim for aiding and abetting in New Jersey, a plaintiff must show “(I) the
commission of a wrongful act; (2) knowledge of the act by the alleged aider-abettor; and (3) the
aider-abettor knowingly and substantially participated in the wrongdoing.” Morganroth &
Morganroth v. Norris. McLaughlin & Marcus. P.C., 331 F.3d 406,415 (3d Cir. 2003). A plaintiff
11
must Show that the defendant willingly and knowingly” associated himself with the unlawful
act
—
a claim of “actual” or “constructive” knowledge is insufficient. Cafaro v. HMC Intl. LLC.
No. 07-2793. 2009 WL 162285, at *4 (D.N.J. June 10. 2009).
In the present case, Plaintiffs have not adequately pleaded the scienter requirement of the
aiding and abetting claims. Plaintiffs allege that the I3ank Defendants “knew or had reason to
know”
of
William Martucci’s and Barbara Queen’s alleged illegal activities (Compl.
¶
87. 101),
First, an allegation that the Bank Defendants “had reason to know” about the activities is
insufficient under New .Jersey law. Further, Plaintiffs do not allege facts that support the notion
that the Bank Defendants “knew” about the activities. For example, Plaintiffs’ Complaint states
that the Bank Defendants failed to take reasonable steps to detect the “suspicious” money
tiansicis (Id
86 103) Plaintiffs Oppositions also contain
numbu of algumcnts
iLg
u ding
preventative actions that the Bank Defendants should have taken. Not only do the Oppositions
introduce new allegations not raised in the Complaint, but nothing alleged by Plaintiffs
shows
that the Bank Defendants willingly and knowingly associated themselves with the alleged illegal
activities, Accordingly, counts ten and twelve must be dismissed.
b) Breach of Duty Claims
Plaintiffs concede that they are not customers of either Bank Defendant, but still argue
that the Bank Defendants breached a duty to them by failing to reasonably inform regulatory
authorities of the illicit money transfers and/or cash withdrawals, The New Jersey Supreme
Court
has stated that “[a]bsent a special relationship, courts will typically bar claims ot non-
customers against banks.” City Check Cashing. Inc. v. Manufacturers Hanover Trust Co.. 764
A.2d 411,417 (N.J. 2001); see also Brunson v. Affinity Fed. Credit Union. 972 A.2d 1112. 1125
(N.J. 2009) (expressing its “reluctance to impose a duty of care on banks in respect of a total
12
stranger”). Plaintiffs cling to the fact that a “special relationship” might allow them to
sue the
Bank Defendants, yet they point to nothing that shows that such a special relationship exists.
Instead, Plaintiffs argue that public policy and fairness dictate that the Bank Defendants
owed a
duty of care to Plaintiffs because the Bank Defendants should not be allowed to ignore the
illegal
activities of their customers. This argument is unavailing because the special relationship “must
be created by agreement. undertaking, or contract.”
ity
heck Cashing, Inc., 764 A.2d at 418.
Plaintiffs’ remaining arguments are premised on the idea that the Bank Defendants violated the
duty imposed by them under the Bank Secrecy Act by failing to obtain the requisite customer
identification required by 3 1 C.F.R.
§
1 020.220. This statute requires banks to implement
Customer Identification Programs (“CIPs”). and lists a number of procedures that the CIPs must
contain. Plaintiffs have made no allegation that the Bank Defendants failed to implement CIPs.
Accordingly, counts eleven and thirteen must be dismissed.
IV.
CONCLUSION
For the foregoing reasons, the lvi otions to Dismiss are granted. PlaintitYs Cross-N lotion
to Amend Complaint is denied, and Plaintiffs’ Second Motion to Amend/Correct Complaint is
denied. An appropriate order follows this Opinion.
Cavanaugh.
Date:
Original:
cc:
October
.2013
Clerk’s Office
Hon. James B. Clark U.S.M.J.
All Counsel of Record
File
13
.j.
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