CAREONE, LLC et al v. BURRIS et al

Filing 74

OPINION filed. Signed by Judge Freda L. Wolfson on 6/28/2011. (eaj)

**NOT FOR PUBLICATION**
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
__________________________________________
:
CAREONE, LLC, et al.,
:
Plaintiffs,
:
:
v.
:
:
WILLIAM G. BURRIS, JR., et al.,
:
:
Defendants.
:
__________________________________________:

Civil No. 10-2309 (FLW)
OPINION

WOLFSON, United States District Judge:
Against a backdrop of numerous state-court litigations between the parties, which
litigations each arise out of Plaintiffs CareOne, LLC’s (“CareOne’s”), Burris & Straus Beach
Development/Cranmer, LLC’s (“Burris & Straus-Cranmer’s”), and Burris & Straus Beach
Developers, LLC’s (“Burris & Straus-Developers’”)(collectively “Burris & Straus’,” and the
three plaintiffs collectively referred to as the “CareOne Companies’”) construction of
assisted living facilities in New Jersey, Plaintiffs obtained leave from a state court judge to
bring this Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§1961,
et seq., action in this Court. In their complaint here, Plaintiffs allege that a former, highranking employee of the CareOne Companies, William G. Burris, Jr., orchestrated and

1

operated a kickback scheme with several construction vendors (“Vendor Defendants”)1
whom he directed to fraudulently inflate their invoices and, thereby, used the CareOne
Companies to line his own pockets. After the complaint was filed, CareOne settled with
Burris and all but one of the Vendor Defendants. The sole remaining Vendor Defendant,
Daniel Bossi, has filed a motion to dismiss Plaintiffs’ Complaint and a motion to strike
Plaintiffs’ Amended Complaint. Defendant Bossi, further, seeks sanctions against Plaintiffs’
counsel pursuant to Federal Rule of Civil Procedure 11 for filing a suit without conducting
an appropriate pre-filing verification of facts alleged in the complaint. For the reasons that
follow, the Court grants Defendant Bossi’s motions to dismiss and to strike, but denies the
request for sanctions.
I.

BACKGROUND
The following facts are taken from Plaintiffs’ Complaint, which facts must be taken

as true on a motion to dismiss. The gravamen of Plaintiff’s Complaint is that William
Burris, along with his wife Linda Burris and other of their relatives, engaged in “a
long-continuing pattern of mail fraud and wire fraud” involving “fraudulent and inflated
invoices submitted to plaintiffs by vendors who are defendants herein, arising from a
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The Defendants named in the complaint are William G. Burris, Jr. (“Burris”),
Linda Burris (Linda Burris”), Linda Burris, Inc., Joseph Foy (“Foy”), Nancy DeAngelis
(“DeAngelis”), Robert Heiler (“Heiler”), Daniel Bossi (“Bossi”), Richard Pulaski (“Pulaski”),
Roland Borglund (“Borglund”) and David Yeager (“Yeager”). Of this group, Defendants
DeAngelis, Heiler, Pulaski, Borglund, Yeager and Bossi are the Vendor Defendants.
Compl., ¶ 3.
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kickback scheme between and among those vendor defendants and defendants Burris and
his wife.” Compl., ¶ 1. Before delving into the details of Plaintiffs’ Complaint, the Court
first explains the genesis of the parties’ dispute and the several state-court litigations of
which this suit is a part.
According to the complaint, “[f]or nearly ten years, Burris was the Executive Vice
President for Construction and Development of CareOne and a member of Burris & Straus
performing the same functions for those entities.” Id. at ¶ 2.
As part of CareOne’s and Burris & Straus’ senior management
team, Burris had significant control and influence over
CareOne and Burris & Straus, as he directed their construction
and development activities. With respect to his position at
CareOne, Burris was responsible for selecting and acquiring
land and existing properties, and then designing, developing
and converting that real estate into assisted living or healthcare
facilities to be run by CareOne, its affiliates or subsidiaries.
Similarly, Burris selected and acquired land and existing
properties on behalf of the Burris & Straus entities, and then
designed, developed and converted that real estate for resale.
Id. As part of his job responsibilities, Burris selected and hired vendors to perform
construction work on the properties. Id. at ¶ 3.
Plaintiffs allege that, throughout his ten-year tenure, “Burris regularly used the
Vendor Defendants for his own personal gain at the expense of the CareOne Companies
by . . . convert[ing], steal[ing] and embezzl[ing] millions of dollars from the CareOne
Companies ....” Id. at ¶ 4. Specifically, the complaint alleges, “Burris abused his senior

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management position at the CareOne Companies by conducting the affairs of the CareOne
Companies to pressure and obtain kickbacks from the Vendor Defendants in exchange for
dispensing with competitive bidding resulting in the Vendor Defendants submitting
padded and excessive invoices to the CareOne Companies which were, as a result, false
and fraudulent.” Id. at ¶ 5. Once the Vendor Defendants “submitted false and fraudulent
invoices to the CareOne Companies . . . Burris, with the assistance of another CareOne
employee, defendant Joseph Foy, would approve these invoices, arrange for payment of
the fraudulent invoices by the CareOne Companies, and affirmatively conceal the no-bid,
kickback scheme from the principal of the CareOne Companies.” Id.
It is alleged that Bossi, as owner of Extreme Construction, Inc. (“Extreme
Construction”), “a New Jersey corporation that was formed specifically for the purpose of
performing work on CareOne projects,” id. at ¶ 21, provided kickbacks to Burris in
response to Burris’ demand for such payments. Id. “As a result, Bossi conspired with
Burris to conduct and to participate in the conduct of the affairs of the CareOne Companies
and Extreme Construction through the pattern of mail and wire fraud arising from Burris’
false and fraudulent invoice scheme.” Id.
Noticeably, the complaint does not describe in what manner the invoices are
fraudulent other than to state that they “were for work performed at an inflated price,
made possible by the lack of competitive bidding and the kickbacks to Burris.” Id. at ¶ 37.

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Plaintiffs attach copies of the invoices to the complaint, and state summarily that “[e]ach
one of the transactions listed in [an exhibit attached to the complaint] caused or resulted
in the use of mails or the interstate wires in violation of 18 U.S.C. §§1341 and 1343.” Id. at
¶ 38.

These invoices, the complaint alleges, constitute “The Bossi and Extreme

Construction Pattern of Fraudulent Invoices and Payments.” Id. at ¶¶ 37-8.
Burris was terminated in March of 2009 for conduct unrelated to the alleged
kickback scheme. Id. at ¶ 6. Following Burris’ termination, Plaintiff brought several state
court actions against Burris and others. See Fram Decl., ¶¶ 2-9 (detailing litigations). One
suit was filed in 2009 in the New Jersey Chancery Division, Bergen County. Through
discovery obtained in that action, Plaintiffs encountered testimony that Burris allegedly
orchestrated and operated the aforesaid RICO scheme to defraud the CareOne Companies.
Plaintiffs then sought permission from the judge, who presided over the Bergen County
action, to bring the instant suit in federal court. While noting that New Jersey’s Entire
Controversy Doctrine would ordinally require such claims to be brought in the pending
state court action, the Judge granted Plaintiffs’ request because requiring that the RICO
claims be brought in that suit would have unduly delayed trial. See generally Tr. of Motion
dated Apr. 30, 2010 at 8 -9, Exh. J to Def. Open. Br. This suit followed.
Plaintiffs filed their initial complaint in May of 2010 asserting federal RICO claims
under 18 U.S.C. § 1962(c), conspiracy to commit federal RICO claims under § 1962(d),

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common law fraud, and civil conspiracy under New Jersey Law. With respect to the RICO
and conspiracy to commit RICO claims, the complaint contains 19 counts that each focus
on distinct RICO enterprises. For example, Count I is titled “RICO § 1962(c) - The CareOne
Enterprise” and is directed at Burris’ and Foy’s alleged conduct together with all Vendor
Defendants in orchestrating an all-encompassing scheme to defraud. See Compl., ¶¶ 47-53.
Count II is titled “RICO § 1962(d) - The CareOne Enterprise” and alleges that Bossi and the
other Vendor Defendants “conspired among themselves and with Burris and Foy to
conduct and participate in the conduct of the affairs of CareOne through a ‘pattern of
racketeering’ violation of 18 U.S.C. §1962(c).” Id. at ¶ 56. Thereafter, the complaint
delineates numerous enterprises, including “The Burris & Straus Enterprises,” Counts III
and IV, “The Pulaski Construction Enterprise,” Counts XXII and XXIII, and, notably, “The
Extreme Construction Enterprise,” Counts X and XI, with a matching RICO, and conspiracy
to commit RICO, count for each enterprise.2
As suggested by the counts’ titles, The Extreme Construction Enterprise allegations
focus on Defendant Bossi’s alleged conduct as owner of Extreme Construction. Id. at ¶¶
93-102. No detail is provided in these counts as to the nature of Bossi’s alleged fraudulent

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There are two types of enterprises asserted in the complaint. The first type
is those linked to a particular Plaintiff-entity, e.g., Count IV (“The Burris & Straus
Enterprises”), and Count VII (“The Linda Burris, Inc., Immobiliare and Prestatori
Immobiliare Enterprises”). The second type is linked to a particular Vendor Defendant,
e.g., The Pulaski Construction Enterprise described in Counts XXII and XXIII.
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conduct, other than the assertion that Bossi transmitted “false invoices, checks, and wires,
in furtherance and as a result of the schemes and artifices to defraud, in violation of 18
U.S.C. §1341 and 18 U.S.C. §1343.” Id. at ¶ 96. Plaintiffs, further, attach to the Complaint
a spreadsheet identifying payments made by the CareOne Companies to Extreme
Construction. Compl., Exh. B. The spreadsheet lists the project for which Extreme
Construction performed work, e.g., CareOne at Evesham Assisted Living, the amount
invoiced, the invoice date, the check amount paid, and the check number.
Piggy-backing on the RICO allegations, the common law fraud claim alleges simply
that “Defendants Burris, Linda Burris, Foy, DeAngelis, Heiler, Bossi, Pulaski, Borglund,
Yeager, and Linda Burris Inc., directly and indirectly, engaged in such fraud, as described
in detail in the Complaint and Exhibits.” Id. at ¶ 147. Similarly, the civil conspiracy claim
alleges that “Defendants Burris, Linda Burris, Foy, DeAngelis, Heiler, Bossi, Pulaski,
Borglund, Yeager, and Linda Burris Inc., directly and indirectly, conspired to, aided,
abetted and facilitated the fraud and conversion, as described in detail in the Complaint
and Exhibits.” Id. at ¶ 150.
Defendants Borglund, Linda Burris, William G. Burris, Jr, Nancy Deangelis, Linda
Burris Inc., Richard Pulaski, and David Yeager jointly moved to dismiss Plaintiffs’
complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) in June of 2010, arguing that
the complaint’s RICO allegations failed to satisfy Rule 9(b)’s heightened pleading

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requirement and, since Plaintiffs’ fraud and civil conspiracy claims rely upon the RICO
allegations, the complaint should be dismissed in its entirety.3

Defendant Bossi

subsequently joined in the other defendants’ motion.
While the motion was pending, and prior to submitting opposition to the
defendants’ motion, Plaintiffs filed an Amended Complaint without leave of Court.
Attached to the Amended Complaint was a letter from Plaintiffs’ counsel stating that “[a]s
a result [of the filing of Plaintiffs’ Amended Complaint], the previously filed motions to
dismiss the initial Complaint are moot ....” Sellinger Letter dated July 30, 2010 (Docket
Entry No. 27). In response, Defendants filed a motion to strike the Amended Complaint
as violative of Rule 15(a), arguing that Rule 15(a) permits amendment as of right only if
made within 21 days of service of a responsive pleading.4
Thereafter, the suit was stayed for a series of months while the parties negotiated
settlement. Once settlement was reached with certain parties, disputes arose as to
enforcement of the settlement’s terms. Finally, all parties with the exception of Bossi
settled their claims in this suit. Accordingly, the only remaining counts in the suit are those
that are asserted against Defendant Bossi—the substantive RICO claims and RICO

3

Initially, the suit was brought in the Camden vicinage. The case was
reassigned to this Court in Trenton during the pendency of the motion to dismiss.
4

As with the motion to dismiss, Defendants Borglund, Linda Burris, William
G. Burris, Jr, Nancy Deangelis, Linda Burris Inc., Richard Pulaski, and David Yeager first
moved to strike and Defendant Bossi subsequently joined their motion.
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conspiracy claims found in Counts II, IV, VII, X, XI, as well as the common law fraud claim
(Count XX) and the civil conspiracy claim (Count XXI).
With the dust settled, and as the only remaining defendant, Bossi then reopened the
previously-filed motions to dismiss the initial complaint and to strike the amended
complaint. Bossi then filed his own reply brief, attaching to that brief copies of construction
contracts and state-court litigation documents involving Bossi and Plaintiffs. These
submissions were provided to the Court in support of Bossi’s contention that Plaintiffs’ suit
here is without merit and that sanctions should be imposed against Plaintiffs’ counsel.
With the motion to dismiss and motion to strike fully briefed, the motions are ripe for
decision.
II.

STANDARD OF REVIEW
A.

Motion to Strike Amended Complaint

Under Federal Rule of Civil Procedure 15(a), as amended effective December 1, 2009,
“a party may amend its pleading once as a matter of course within: (A) 21 days after
serving it, or (B) if the pleading is one to which a responsive pleading is required, 21 days
after service of a responsive pleading or 21 days after service of a motion under Rule 12(b),
(e), or (f), whichever is earlier.” Fed.R.Civ.P. 15(a)(1). Otherwise, the party must seek leave
of court to amend. Id. at 15(a)(2).
B.

Motion to Dismiss

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The Federal Rules of Civil Procedure provide that a complaint “shall contain (1) a
short and plain statement of the grounds upon which the court's jurisdiction depends ... (2)
a short and plain statement of the claim showing that the pleader is entitled to relief, and
(3) a demand for judgment for the relief the pleader seeks.” Fed.R.Civ.P. 8(a). The purpose
of a complaint is “to inform the opposing party and the court of the nature of the claims
and defenses being asserted by the pleader and, in the case of an affirmative pleading, the
relief being demanded.” 5 Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND
PROCEDURE § 1182 (3d ed. 2004).
In reviewing a motion to dismiss for failure to state a claim under 12(b)(6), a court
must take all allegations in the complaint as true, viewed in the light most favorable to the
plaintiff “and determine whether, under any reasonable reading of the complaint, the
plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d
Cir. 2008) (citation and quotations omitted). In Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court “retired” the language in
Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that “a complaint
should not be dismissed for failure to state a claim unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”
Twombly, 550 U.S. at 561 (quoting Conley, 355 U.S. at 45–46). Rather, the factual
allegations in a complaint “must be enough to raise a right to relief above the speculative

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level.” Id. at 555. The Third Circuit summarized the pleading requirement post- Twombly:
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. This ‘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.’
Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 556).
In affirming that the Twombly standard applies to all motions to dismiss, the
Supreme Court recently further clarified the 12(b) (6) standard. “First, the tenet that a court
must accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions.” Ashcroft v. Iqbal, ––– U.S. ––––, ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868
(2009). “Second, only a complaint that states a plausible claim for relief survives a motion
to dismiss.” Iqbal, 129 S.Ct. at 1950. Accordingly, “a court considering a motion to dismiss
can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth.” Id. In short, “a complaint must
do more than allege the plaintiff's entitlement to relief. A complaint has to ‘show’ such an
entitlement with its facts.” Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009).
The Third Circuit recently reiterated that “judging the sufficiency of a pleading is
a context-dependent exercise” and “[s]ome claims require more factual explication than
others to state a plausible claim for relief.” West Penn Allegheny Health System, Inc. v.

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UPMC, 627 F.3d 85, 98 (3d Cir. 2010). This means that, “[f]or example, it generally takes
fewer factual allegations to state a claim for simple battery than to state a claim for antitrust
conspiracy.” Id. That said, the Rule 8 pleading standard is to be applied “with the same
level of rigor in all civil actions.” Id. (quoting Iqbal, 129 S.Ct. at 1953).
Moreover, in evaluating a motion to dismiss, a court may consider only the
complaint, exhibits attached to the complaint, matters of public record, and undisputedly
authentic documents if the complainant's claims are based upon these documents. Pension
Benefit Guar. Corp. v. White Consol. Indus., 98 F.2d 1192, 1196 (3d Cir. 1993). Importantly
“a court may consider 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.
Otherwise a plaintiff with a legally deficient claim could survive a motion to dismiss simply
by failing to attach a dispositive document on which it relied.” Id. (emphasis added).
Here, Defendant Rossi has attached to his reply papers copies of state-court
litigation documents relating to a dispute over the monies paid to Extreme Construction
for work on various construction projects, as well as copies of construction contracts for
some of the projects that are the subject of the parties’ dispute in this case. While public
records may be considered on a motion to dismiss, a Court may not consider the state-court
litigation documents for the truth of the matters asserted therein. See Lum v. Bank of
America, 361 F.3d 217, 222 (3d Cir. 2004) abrogated on other grounds by Twombly, 550 U.S.

12

at 561-63; Southern Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd., 181
F.3d 410, 426 n.7 (3d Cir. 1999) (“[A] court that examines a transcript of a prior proceeding
to find facts converts a motion to dismiss into a motion for summary judgment.”) As for
the construction contracts, Plaintiffs’ complaint does not refer in any way to the contracts
and it is not clear from the complaint that Plaintiffs’ claims are based on those contracts.
Moreover, these exhibits were attached to Defendant Bossi’s reply papers and Plaintiffs did
not have the opportunity to respond to the exhibits.5 Accordingly, the Court will not rely
upon the contracts, or the state-court litigation documents, in ruling on the instant motion
to dismiss.
C.

Rule 11 Sanctions

Federal Rules of Civil Procedure Rule 11 places an obligation on counsel to sign any
pleading submitted to the Court. Fed.R.Civ.P 11(a). In signing the pleading, counsel
“certifies that to the best of [his or her] knowledge, information, and belief, formed after
an inquiry reasonable under the circumstances [that, inter alia,] the factual contentions have

5

For this reason, the Court declines Defendant’s suggestion to convert the
motion to one for summary judgment under Federal Rule of Civil Procedure 12(d). In
order to so convert a motion, “all parties must be given the opportunity to present material
to the court.” Rose v. Bartle, 871 F.2d 331, 340 (3d Cir. 1989) quoted in Youssef v.
Department of Health and Senior Services, No. 10-3628, 2011 WL 1444226, *3 (3d Cir. 2011).
Here, Plaintiffs did not have an opportunity to address the contracts submitted by
Defendant Rossi or submit any materials that might affect the Court’s interpretation and
reliance upon of the contracts. Thus, conversion under Rule 12(d) would not be
appropriate.
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evidentiary support or, if specifically so identified, will likely have evidentiary support
after a reasonable opportunity for further investigation or discovery.” Id. at 11(b)(3). “If,
after notice and a reasonable opportunity to respond, the court determines that Rule 11(b)
has been violated, the court may impose an appropriate sanction on any attorney” who
violated that subsection of the rule. Id. at 11(c)(1). However, for a party to request
sanctions against opposing counsel, such a request must be made “separately from any
other motion and must describe the specific conduct that allegedly violates Rule 11(b).”
Id. at 11(c)(2).
III.

DISCUSSION
As a threshold issue, the Court notes that while Defendant Bossi expresses his

frustration with the piecemeal manner in which the parties’ claims have been litigated,
Bossi does not argue that New Jersey’s entire controversy doctrine bars this suit. Review
of the case law reveals that Bossi is correct not to challenge Plaintiffs’ suit on this ground
because “the Entire Controversy Doctrine does not preclude the initiation of a second
litigation before the first action has been concluded.” Rycoline Prods., Inc. v. C & W
Unlimited, 109 F.3d 883, 889 (3d Cir. 1997) cited in Youssef v. Department of Health and
Senior Services, No. 10-3628, 2011 WL 1444226, *2 (3d Cir. 2011). Moreover, neither party
has informed the Court that the state court action in Bergen County has reached final
adjudication.

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As a second threshold issue to deciding the motion to dismiss, and in ruling on
Defendant Bossi’s motion to strike, the Court must determine whether Plaintiffs’ filing of
the Amended Complaint was proper under Rule 15(a). It is clear that Plaintiffs’ filing did
not comport with the Rule’s dictates because it was not filed within 21 days of the filing of
the first motion to dismiss on June 29, 2010; Plaintiffs’ Amended Complaint was not filed
until a month later, on July 29, 2010. Fed.R.Civ.P. 15(a)(1) (“a party may amend its
pleading once as a matter of course within: (A) 21 days after serving it, or (B) if the
pleading is one to which a responsive pleading is required, 21 days after service of a
responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f),
whichever is earlier.”). Indeed, twenty-one days from the date of Defendants’ Rule 12(b)(6)
motion was July 20, 2010, and the Amended Complaint was not filed until nine days
thereafter. Accordingly, the Court will focus its inquiry, in adjudicating the motion to
dismiss, on the initial complaint’s allegations and Bossi’s motion to strike the Amended
Complaint is granted.6
Finally, and before turning the merits of the motion to dismiss, the Court denies

6

Even if the Amended Complaint was properly filed, the complaint’s RICO
allegations at issue in this motion remain unchanged in the Amended Complaint.
Plaintiffs’ stated purpose in amending the complaint was solely to “add as plaintiffs the
individual CareOne LLC subsidiaries that issued payment for each of the fraudulent
invoices submitted by the various Vendor Defendants.” Pl. Opp. at 9. Thus, this Court’s
ruling on this motion directed to the complaint would be equally applicable to assessing
the sufficiently of the Amended Complaint.
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Bossi’s request for sanctions against Plaintiffs’ counsel. In order for a party to request
sanctions against opposing counsel, such a request must be made “separately from any
other motion and must describe the specific conduct that allegedly violates Rule 11(b).”
Id. at 11(c)(2). Here, Defendant Bossi raised his request for sanctions in his reply brief to
the motion to dismiss. This method of seeking sanctions is simply not permitted under the
plain text of Rule 11. Accord Curtis & Assoc., P.C. v. Law Offices of David M. Bushman,
Esq., 758 F.Supp.2d 153, 182 (E.D.N.Y. 2010) (denying sanctions request for failure to bring
in a separate moton although RICO suit allegations were not pled with particularity, there
was a “long history of litigation between some of the parties in this case, and the currently
ongoing state court litigation involving many of these same parties,” and certain of
counsel’s argument went against the weight of legal authority).7
Turning now to the merits, 18 U.S.C. § 1962(c) “makes it unlawful ‘for any person
employed by or associated with any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate, directly or indirectly, in the
conduct of such enterprise’s affairs through a pattern of racketeering activity.’“ In re Ins.
Brokerage Antitrust Litig., 618 F.3d 300, 362 (3d Cir.2010) (citing 18 U.S.C. § 1962(c)). For
Plaintiffs to plead a civil RICO claim under 18 U.S.C. § 1962(c), they must allege (1) conduct
7

Because Defendant’s request for sanctions was not properly filed, the Court
does not comment on Defendant’s reliance upon the opinion in South Broward Hosp. Dist.
v. MedQuist Inc., 516 F.Supp.2d 370 (D.N.J. 2007), by another judge sitting in this district,
that issued a written warning to one of Plaintiffs’ counsel here for his conduct in that case.
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(2) of an enterprise (3) through a pattern (4) of racketeering activity. Sedima v. Imrex Co.,
473 U.S. 479, 482–83, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). The term “enterprise” includes
“ ‘any individual, partnership, corporation, association, or other legal entity, and any union
or group of individuals associated in fact although not a legal entity.’“ Ins. Brokerage, 618
F.3d at 362–63 (citing 18 U.S.C. § 1961(4)). With respect to the pattern of racketeering
activity, the statute “requires at least two acts of racketeering activity within a ten-year
period” which “may include, inter alia, federal mail fraud under 18 U.S.C. § 1341 or federal
wire fraud under 18 U.S.C. § 1343.” Id. (citing 18 U.S.C. § 1961(1)(5) and Lum, 361 F.3d at
223).
When the predicate acts alleged are mail fraud, a plaintiff must not only plead the
elements of mail fraud but must also satisfy the heightened Rule 9(b) pleading standard.
See Warden v. McLelland, 288 F.3d 105, 114 (3d Cir. 2002). To state a claim for mail fraud
under 18 U.S.C. § 1341, a plaintiff must allege: “(1) the existence of a scheme to defraud; (2)
the use of the mails, whether the United States Postal Service or a private carrier, in
furtherance of the fraudulent scheme; and (3) culpable participation by the defendant ( i.e.,
participation by the defendant with specific intent to defraud). United States v. Dobson,
419 F.3d 231, 236-37 (3d Cir. 2005)).
Rule 9(b) further requires that “a party must state with particularity the
circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). The plaintiff may

17

accomplish this by “identify[ing] the purpose of the mailing within the defendant’s
fraudulent scheme and specify[ing] the fraudulent statement, the time, place, and speaker
and content of the alleged misrepresentation.” Annulli v. Panikkar, 200 F.3d 189, 200 n.10
(3d Cir. 1999) overruled on other grounds by Rotella v. Wood, 528 U.S. 549, 120 S.Ct. 1075,
145 L.Ed.2d 1047 (2000)).8 In other words, Plaintiffs’ pleading must contain the “who, what,
when and where details of the alleged fraud.” District 1199P Health and Welfare Plan v.
Janssen, L.P., --- F.Supp.2d ----, 2011 WL 1086004 at *13 (D.N.J. 2011) (quoting Allen
Neurosurgical Assoc., Inc. v. Lehigh Valley Health Network, No. 99–4653, 2001 U.S. Dist.
LEXIS 284, at *8, 2001 WL 41143 (E.D.Pa. Jan. 18, 2001)). Indeed, “[t]he purpose of Rule 9(b)
is to provide notice of the ‘precise misconduct’ with which defendants are charged” in
order to give them an opportunity to respond meaningfully to the complaint, “and to
prevent false or unsubstantiated charges.” Rolo v. City of Investing Co. Liquidating Trust,
155 F.3d 644, 658 (3d Cir. 1998) abrogated on other grounds by Rotella v. Wood, 528 U.S.
549, 120 S.Ct. 1075, 1078-80, 145 L.Ed.2d 1047 (2000).

8

“The Third Circuit permits federal common law or ‘garden variety’ fraud,
including mail and wire fraud.” District 1199P Health and Welfare Plan v. Janssen, 2008
U.S. Dist. LEXIS 103526, at *39, 2008 WL 5413105 (D.N.J. Dec. 23, 2008) (citing Tabas v.
Tabas, 47 F.3d 1280, 1290 (3d Cir.), cert denied, 515 U.S. 1118, 115 S.Ct. 2269, 132 L.Ed.2d
275 (1995)). The two elements of a mail and wire fraud charge are 1) a scheme to defraud;
and 2) mailing or wiring in furtherance of the scheme to defraud. Id. (citing Greenberg v.
Brewster, 816 F.Supp. 1039, 1049 (E.D.Pa.1993)).

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Here, each of Plaintiffs’ claims rise and fall on whether the RICO allegations satisfy
Rule 9(b)’s heightened pleading standard since, as noted, Plaintiffs’ state law fraud and
civil conspiracy claims rely on the RICO mail fraud allegations. For this reason, each of
Plaintiffs’ claims is also subject to the strictures of Rule 9(b). Cf. Lum, 361 F.3d at 228
(holding that, while antitrust claims are typically not subject to Rule 9(b), “[b]ecause
plaintiffs allege that the defendants accomplished the goal of their [antitrust] conspiracy
through fraud, the [c]omplaint is subject to Rule 9(b).”); Gray v. Bayer Corp., 2009 U.S. Dist.
LEXIS 48181, at *5-*6 (D.N.J. June 8, 2009) (“[A] plaintiff cannot escape Rule 9(b) by alleging
claims that do not traditionally involve fraud; rather, the test is whether the particular
claim alleged in this matter sounds in fraud. If so, the pleading is subject to 9(b).”).
The fraudulent scheme alleged in the complaint is arguably two-fold, that—(1)
Burris and the other CareOne employee-defendants fraudulently concealed that Burris
hand-picked the vendors to whom he awarded vendor contracts for the building of
CareOne facilities rather than competitively bidding those contracts; and (2) Burris directed
Bossi and the other Vendor Defendants to fraudulently inflate their invoices so that Burris
could skim off the top of the CareOne Companies’ payments to the Vendor Defendants,
retaining the difference in payment for himself as a kickback. However, Plaintiffs make
clear in their opposition papers that
[t]he only racketeering activity alleged in the Complaint —
and, as a result, the only activity that needed to be alleged with
19

particularity — was the false and fraudulent invoices
defendant submitted to plaintiffs, and that plaintiffs paid,
which form the basis of the mail fraud and wire fraud pattern
of racketeering activity.
Pl. Opp. at 4. In Plaintiffs’ words, “[i]t was these submissions of false invoices resulting in
payments by plaintiffs — and nothing else — that violated the mail and wire fraud
statutes.” Id. Accordingly, the Court’s reads Plaintiffs’ mail fraud allegations as stating
simply that the inflated invoices allegedly submitted by Bossi were fraudulent.
As to these allegations, Defendant argues that they fail to satisfy Rule 9(b)'s
particularity requirement. In Defendant’s view, while Plaintiffs attach to their complaint
a summary of the alleged invoices (which summary identifies the payments made by the
CareOne Companies to Extreme Construction, the amount invoiced, the invoice date, the
check amount paid, and the check number), Plaintiffs have failed to specify what aspect of
the Extreme Construction invoices is fraudulent.9 Indeed, the complaint does little more
than state that the invoices were “false” and “padded and excessive invoices.” See Compl.,
¶ 5 (“padded and excessive invoices”); id. at 14 (“false and fraudulent invoices”); id. at ¶

9

Relatedly, Defendant Bossi argues that Plaintiffs’ allegations fail to satisfy
Rule 9 because the allegations do not reference the various construction contracts Plaintiffs
entered into with Extreme Construction. However, as indicated above, the Court may not
consider the contracts attached to Defendant’s reply brief on the instant motion to dismiss.
Accordingly, the Court does not consider this argument herein.
20

21 (“false and fraudulent invoice scheme”).10
Plaintiffs counter that the listing of the allegedly fraudulent transactions is sufficient
to meet the particularity requirement, arguing that “each invoice listed [in the summary]
was padded and excessive and thus misrepresented the value of the actual work
performed.” Pl. Opp. at 6. Further, in Plaintiffs’ view, they have complied with Rule 9(b)
by alleging “who, what, when, where and how” of the transactions at issue. Id. at 13.
The problem with Plaintiffs’ argument is that they underestimate what the “who,
what, when, where and how” embodiment of the Rule 9(b) standard requires. As
explained by the Third Circuit in Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007), “a
plaintiff alleging fraud must state the circumstances of the alleged fraud with sufficient
particularity to place the defendant on notice of the ‘precise misconduct with which [it is]
charged.” Id. at 200 (quoting Lum, 361 F.3d at 223-24). In Frederico, the Third Circuit held
that the allegations pled in that case failed to satisfy the stringent pleading requirements
of Rule 9(b).11 The plaintiff in that case challenged the defendant-truck renting company’s

10

Id. at ¶ 96 (“As set forth above and in Exhibit B, Bossi used, and caused
numerous uses of, the United States mails and interstate wires, including, but not limited
to, the transmission therein of false invoices, checks, and wires, in furtherance and as a
result of the schemes and artifices to defraud, in violation of 18 U.S.C. §1341 and 18 U.S.C.
§1343. Each of these violations constitutes “racketeering activity” within the meaning of 18
U.S.C. §1961(1).”).
11

Although Frederico’s analyzes a common law fraud claim, as opposed to mail
fraud, its application of the Rule 9(b) heightened pleading standards is equally applicable
here.
21

late fees as being fraudulently imposed, alleging in her complaint that the late fees were
“excessive,” that the defendant failed to disclose the lack of after-hours locations at which
the truck could be returned, and that the defendant misrepresented that the truck rental
and late fees would not “ would not accumulate beyond the time at which Plaintiff and
class members returned or attempted to return rented vehicles ....” Id.
Rejecting the plaintiff’s argument on appeal that these allegations “disclose[d] the
substance” of the alleged misrepresentation, i.e., that the defendant misrepresented the
actual hours during which trucks could be returned, the Third Circuit concluded that the
complaint’s allegations did not put the defendant “on notice of the precise misconduct”
with which it was charged. Id. (quoting Lum, 361 F.3d at 223-24). Specifically, the plaintiff
read the parties’ agreement as stating that the store closed at 10 pm and, therefore, the
truck could be returned at any time prior to 10 pm.

Contrary to the plaintiff’s

understanding, the rental department closed earlier than the remainder of the store and the
parties’ agreement did not disclose that fact. “[T]hus[,] any attempt to return the vehicle
before closing but after the rental department closed resulted in the unexpected overnight
accumulation of late fees.” Id. at 201 n.10.
In short, the plaintiff argued on appeal that the “fees were excessive because of the
undisclosed gap between the time the rental department closes (a time not disclosed in the
Agreement) and the time the store closes (a time disclosed in the Agreement).” Id. at 201

22

n. 9. The plaintiff’s complaint, however, did not include allegations to that effect. “Without
such detail appearing in the complaint, [the court reasoned, the defendant] was not placed
on notice of the precise misconduct with which it is charged.” Id. (alterations and citation
omitted).12
Similarly, here, Plaintiffs fail to allege in what manner the Extreme Construction
invoices were excessive. Plaintiffs’ description of the invoices merely lists the invoice and
the amount. While the complaint describes the invoices as “padded,” “excessive,” and
“false,” nowhere in the complaint (or summary of invoices) do the Plaintiffs allege the
substance of the alleged misrepresentation. It is unclear whether the Plaintiffs are alleging
that the number of invoices submitted are excessive or whether the amounts sought in each
individual invoice is excessive, or a combination of both. Without this sort of detail,
Plaintiffs fail to place Defendant Rossi on notice of the “precise misconduct” against which
he must defend. Id.
Moreover, to the extent that Plaintiffs argue that requiring allegations that detail the
numerical amount of the overcharges would require them to prematurely present their
damage calculation, and further which Plaintiffs assert they could not accomplish without
the benefit of discovery, their argument is misdirected. It is not the numerical amount of

12

Another deficiency in that plaintiff’s complaint was a failure to assert which
person made the alleged false misrepresentation. Id. at 201-02. That type of deficiency is
not at issue in this case.
23

alleged overcharges that need be specified, but the “general content of the
misrepresentation,” that is missing from their allegations. Lum, 361 F.3d at 224.
The decision in Ford Motor Co. v. Edgewood Properties, Inc., No. 06-1278, 2009 WL
150951 (D.N.J. Jan. 20, 2009), further illustrates what is lacking from Plaintiffs’ allegations
here. In that case, the plaintiff alleged that the defendants “formed an enterprise through
the wires and mails, with the intent to distribute contaminated concrete that they knew was
contaminated so as to avoid incurring costs of legally disposing of the concrete.” Id. at *16
(emphasis added). In other words, the complaint alleged that the defendants were
invoicing a damaged product at full price. Furthermore, the plaintiff alleged, that the mails
were used “to avoid the significant expenses of properly and lawfully handling, testing
and/or disposing of the contaminated concrete.” Id. This sort of language, the court in
Edgewood held, sufficiently placed the defendants on notice of the fraudulent conduct they
were alleged to have committed.

While each individual mailing did not include

misrepresentations, when read as a whole, the plaintiff’s allegations still informed the
defendants of the nature of the misrepresentations alleged. Id. Here, in contrast to the
allegations pled in Edgewood, Plaintiffs have not alleged anything about Defendant Bossi’s
submission of invoices other than the conclusory statements that the invoices were “false”
and “padded.”
Plaintiffs correctly argue that even “innocent mailings“ that further a scheme to

24

defraud may satisfy the mailing requirement of a mail fraud claim. See U.S. v. Al-Ame,
434 F.3d 614, 617 (3d Cir. 2006) (“the Supreme Court has definitively rejected the assertion
that routine or innocent mailings are per se excluded from the scope of 18 U.S.C. § 1341.“).
But the complaint here alleges that the invoices are the fraud—not that they are mere
instrumentalities by which the fraud was accomplished. Indeed, as Plaintiffs acknowledge
in their papers, while “[a] scheme or artifice to defraud need not be fraudulent on its face,
[it] must involve some sort of fraudulent misrepresentations or omissions reasonably
calculated to deceive persons or ordinary prudence and comprehension.” Pl. Opp. at 12-13
(quoting Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1415 (3d Cir. 1991)). This is
because “the statutory term “defraud” [found in the mail fraud statute] usually signifies
‘the deprivation of something of value by trick, deceit, chicane or overreaching.” Id.
(citations omitted). What is lacking in Plaintiffs’ allegations here is that they do not
describe the “trick.”
Furthermore, Plaintiffs’ citation to HT of Highlands Ranch, Inc. v. Hollywood
Tanning Systems, Inc., 590 F.Supp.2d 677 (D.N.J. 2008), is unhelpful to them. The plaintiffs
in HT alleged in their complaint and RICO Case Statement that the defendants:
induced Plaintiffs into entering into deceptively vague leasing
agreements with [one defendant] that contained little to no
description of the equipment they were leasing, and that [the
defendant] thereafter exploited such vagueness by mailing and
faxing to the leasee-Plaintiffs misleading invoices that charged
these Plaintiffs for equipment they did not receive, and for new
25

equipment when they received used equipment.
Id. at 686-87 (emphasis added). The district court found that these allegations satisfied Rule
9(b)’s particularity requirement.
Ironically, Plaintiffs’ reference to HT highlights the deficiencies in their own
pleading. The allegations in HT specified the precise reason why the invoices were
misleading: they were alleged to have “charged [the] Plaintiffs for equipment they did not
receive, and for new equipment when they received used equipment.” Id. Charging
someone for requirement that is not provided is clearly a form of trickery and deceit. So
too is charging someone for new equipment when, in fact, used equipment was provided.
These sort of allegations fairly place a defendant on notice of the fraudulent conduct
against which he must defend. The most descriptive allegations in Plaintiffs’ Complaint
are that the invoices “greatly exceeded the actual value of the work performed,“ Compl.,
¶ 5, and that the they “were for work performed at an inflated price ....” Compl., ¶ 37. But
these statement do not allege how the “value” is calculated or what constitutes an
“inflated” price. The phrases “exceeded the actual value” and “inflated price,” without
setting forth the baseline by which a value is deemed excessive or a price deemed inflated,
does not assert fraudulent conduct. Thus, in stark contrast to the allegations in HT,
Plaintiffs’ allegations do not explain the nature of the trickery Defendant Bossi is alleged

26

to have completed by mailing the invoices.13
For these reasons, the Court concludes that Plaintiffs fail to sufficiently plead
predicate acts of mail fraud with particularity. Because Plaintiffs do not properly plead the
predicate acts, the Court need not address Defendant’s remaining challenges to Plaintiffs’
RICO claims. Accordingly, Defendant Rossi’s motion to dismiss Plaintiffs’ RICO claims is
granted without prejudice.14
As for Plaintiffs’ common law fraud and civil conspiracy claims, those claims
likewise fail to satisfy Rule 9(b) and must be dismissed. See Frederico, 507 F.3d at 202-03
(dismissing common law fraud claim for failure to satisfy Rule 9(b)); Spitz v. Medco Health
Sol., Inc., No. 10-cv-01159, 2010 WL 4615233, *4 (D.N.J. Nov. 3, 2010) (dismissing civil

13

Plaintiffs’ citation to Darrick Enterprises v. Mitsubishi Motors Corp., No. 054359, 2007 WL 2893366 (D.N.J. Sept. 28, 2007), is equally unavailing. It was alleged, in that
case, that the defendants “dumped” unordered cars on the plaintiffs and mailed invoices
for the unordered cars to the plaintiffs. The invoices were (obviously) fraudulent because
they were for cars that had not been purchased. Id. at *8.
14

The Court is aware that Rule 9(b) does not apply to the RICO conspiracy
claims asserted under 18 U.S.C. § 1962(d). See Rose v. Bartle, 871 F.2d 331, 366 (3d Cir.
1989). “But a § 1962(d) claim must be dismissed if the complaint does not adequately allege
an endeavor which, if completed, would satisfy all of the elements of a substantive RICO
offense.” In re Ins. Brokg. Antitrust Litig., 618 F.3d at 373 (alterations and citations
omitted). Because the Court concludes that Plaintiffs’ substantive RICO claims fail, so too
do their conspiracy claims. In addition, the Court notes that Defendant Bossi is mistaken
when he argues that the complaint alleges that he violated section 1962(c) as a member of
the CareOne and related enterprises. See Def. Reply at 13. For those enterprises, only
RICO conspiracy claims under section 1962(d) are brought against Bossi. See Compl.,
Counts I - VII. The Court’s analysis of the Extreme Construction enterprise claims under
section 1962(c) applies equally to the CareOne and related enterprise claims.
27

conspiracy claim for failure to satisfy Rule 9(b)); see also Brown ex rel. Estate of Brown v.
Philip Morris Inc., 228 F.Supp.2d 506, 517 n. 10 (D.N.J.2002) (“Civil conspiracy is not an
independent cause of action, and conspiracy liability depends on the presence of an
underlying finding of . . . liability . . . The dismissal of plaintiff's other causes of action
demands the dismissal of her conspiracy claim.”).15
The Third Circuit directs that plaintiffs be given an opportunity to amend unless
amendment would be futile. Alston v. Parker, 363 F.3d 229, 235 (3d Cir. 2004) (“[E]ven
when a plaintiff does not seek leave to amend, if a complaint is vulnerable to 12(b)(6)
dismissal, a District Court must permit a curative amendment, unless an amendment
would be inequitable or futile.”). Defendant Bossi argues that granting leave to amend
would be futile here because the construction contracts governing the relationship between
Extreme Construction and Plaintiffs are lump sum contracts. In other words, that the
agreements are for a lump sum makes it implausible, if not impossible, that Defendant
Bossi could have actually padded the invoices. To the extent that the agreements attached
to Defendant’s reply brief are authentic documents, the Court agrees that those contracts
may preclude Plaintiffs’ RICO claims. As noted, however, the Court cannot rely on those
contracts at this juncture and, consequently, may not rely upon the contracts to conclude

15

Because the Court dismisses, without prejudice, Plaintiffs’ claims for failure
to satisfy Rule 9(b), the Court does not reach Defendant Bossi’s alternative arguments for
dismissal of Plaintiffs’ various claims.
28

that amendment would be futile. Nonetheless, Plaintiffs are cautioned to consider this
argument in determining how, or whether, to replead. Accordingly, Defendant Rossi’s
motion to dismiss is granted and Plaintiffs are granted leave to amend their RICO claims,
common law fraud, and civil conspiracy claims in a manner consistent with the dictates of
this Opinion.
IV.

CONCLUSION
For the foregoing reasons, the Court grants both Defendant Rossi’s motion to strike

and to dismiss. The motion to dismiss is granted without prejudice and Plaintiffs are
granted leave to amend their complaint within twenty (20) days of the date of this Opinion.
Defendant’s request for sanctions is denied.

Dated:

June 28, 2011

/s/ Freda Wolfson
Honorable Freda L. Wolfson
United States District Judge

29