287 Franklin Avenue Residents' Association et al v. Meisels et al

Filing 341

ORDER ADOPTING REPORT AND RECOMMENDATIONS. For the reasons set in the enclosed order, Judge Orenstein's Report and Recommendation is incorporated by reference and adopted in its entirety and the objections of the Represented Plaintiffs and Mr. Sasmor are respectfully denied. Accordingly, Mr. Sasmor's motion for summary judgment is denied in its entirety, and the Goldberger, Land Trust, and Garcia Defendants' motions for summary judgment are granted. Having dismissed plaintiffs& #039; federal law claims, the court declines to exercise jurisdiction over plaintiffs' state law claims. The Clerk of Court is respectfully requested to dismiss defendants Louis Garcia, Chaim Goldberger, Joel Kaufman, Abraham Schneebalg, Isaac Teitelbaum, Henry Management LLC, Kings County Realty Corp, and Ronald Henry Land Trust from this action. Plaintiffs shall advise the court no later than September 30, 2015 as to how they plan to proceed with this action. Ordered by Judge Kiyo A. Matsumoto on 9/17/2015. (Alagesan, Deepa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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287 FRANKLIN AVENUE RESIDENTS’
ASSOCIATION, et al.,

ORDER ADOPTING REPORT
AND RECOMMENDATION

Plaintiffs,
11-CV-976(KAM)(JO)
-againstCHAIM MEISELS, et al.,
Defendants.
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KIYO A. MATSUMOTO, United States District Judge:
Plaintiffs Lisa Lin, William Osterweil, Kurt Fletcher,
Vilija Skubuyte, Jon Sasmor, and 287 Franklin Avenue Residents’
Association 1 initiated this civil action bringing claims under
the federal Racketeer Influenced and Corrupt Organizations
(“Rico”) Act, 18 U.S.C. § 1961, et seq., and state law, relating
their tenancies at 287 Franklin Avenue, Brooklyn, New York (“287
Franklin”).

(See generally ECF No. 41, First Amended Complaint

(“Am. Compl.”).)
Before the court on de novo review of a Report and
Recommendation of the Honorable James Orenstein are certain
defendants’ motions for summary judgment and dismissal for
failure to state a claim, 2 as well as pro se plaintiff Jon

1

Although plaintiffs filed this action pro se, Ms. Lin, Mr. Osterweil, Mr.
Fletcher, Ms. Skubuyte, and 287 Franklin Avenue Residents’ Association
(together, the “Represented Plaintiffs”) have since retained counsel. (See
ECF No. 42, Notice of Appearance by Gideon Orion Oliver dated 7/12/11.) Mr.
Sasmor is proceeding pro se.
2

Motions were filed by Henry Management, LLC and Chaim Goldberger (together,
the “Goldberger Defendants”), Ronald Henry Land Trust, Isaac Teitelbaum, and

Sasmor’s motion for partial summary judgment. (See ECF No. 309,
[Garcia Defendants’] Notice of Motion Pursuant to FRCP 12(b)(6)
and Rule 56; ECF No. 296, [Land Trust Defendants’] Notice of
Motion; ECF No. 285, [Goldberger Defendants’] Motion for Summary
Judgment; ECF No. 275, Memorandum of Law In Support of Plaintiff
Jon Sasmor’s Motion for Summary Judgment (“Sasmor Mem.”).)
Magistrate Judge James Orenstein issued a Report and
Recommendation (“R&R”) recommending that the court deny Mr.
Sasmor’s motion for partial summary judgment and grant the
Goldberger, Land Trust, and Garcia Defendants’ motions for
summary judgment, dismissing the plaintiffs’ RICO claims with
prejudice and declining to exercise jurisdiction over their
remaining state law claims. 3

(ECF No. 338, R&R dated 7/20/15.)

Mr. Sasmor and the Represented Plaintiffs have timely objected
to the R&R.

(See ECF No. 339, Objections by Mr. Sasmor (“Sasmor

Obj.”) dated 8/6/15; ECF No. 340, Represented Plaintiffs’
Objections to the R&R dated 8/6/15 (“Represented Pls. Obj.”).)
Having undertaken a de novo review of the record in light of the

Abraham Schneebalg (together, the “Land Trust Defendants”), and Kings Country
Realty Corp., Louis Garcia, and Joel Kaufman (together, the “Garcia
Defendants”). Default was entered against defendants Chaim Meisels, Samuel
Emmanus, Peter Henry, and Brian Dudjak (see Clerk’s Entries of Default dated
4/12/15, 4/15/11, 4/25/11, and 3/12/15), as well as defendants Nathan Smith,
Josh Bosch, and People Choice Real Estate, LLC (together, the “Realtor
Defendants”) (see Clerk’s Entry of Default dated 9/26/12). Plaintiffs
voluntarily dismissed their claims against defendants Joe Doe and Ronald
Henry. (See ECF Nos. 198, 199.)
3

On July 20, 2015, Judge Orenstein also issued a Report and Recommendation in
Sasmor v. Powell, 11-cv-4645, which the court adopts in a concurrently-issued
order.

2

parties’ written objections pursuant to 28 U.S.C.
§ 636(b)(1)(C), the court respectfully denies the parties’
objections, incorporates the R&R by reference, and adopts it in
its entirety.
STANDARD OF REVIEW
To the extent that a party makes specific and timely
objections to a magistrate’s findings, the court must apply a de
novo standard of review.

United States v. Male Juvenile, 121

F.3d 34, 38 (2d Cir. 1997); 28 U.S.C. § 636(b)(1)(C).

After

such review, the district court “may accept, reject, or modify,
in whole or in part, the findings or recommendations made by the
magistrate judge.”

28 U.S.C. § 636(b)(1)(C).
DISCUSSION

The detailed facts in this matter, both undisputed and
disputed, are set forth in Judge Orenstein’s R&R. 4

(R&R at 2-9.)

In light of Mr. Sasmor and the Representative Plaintiffs’ timely
objections, the court has undertaken a de novo review of the
full record 5 including the applicable law, the pleadings, the

4

Mr. Sasmor makes a number of objections to the facts recited in the R&R (see
Sasmor Obj. Ex. 4). As discussed further below, even if the court were to
accept Mr. Sasmor’s characterizations and clarifications, the court’s
analysis and conclusion would not change.
5

The court notes that, although parties are required by Federal Rule 56(c)(1)
to support their factual positions on a motion for summary judgment by
“citing to particular parts of materials in the record” and the court “need
consider only the cited materials,” the court “may consider other materials
in the record” in its discretion. Fed. R. Civ. P. 56(c)(1)(A), (3).
Nevertheless, the court need not “consider what the parties fail to point
out” by failing to include relevant facts and citations in their Local Rule
56.1 Statements. Holtz v. Rockefeller & Co., 258 F.3d 62, 73 (2d Cir. 2001)

3

underlying record, the parties’ submissions on the instant
motions, the R&R, and the parties’ objections to the R&R.

See

28 U.S.C. § 636(b)(1)(C).
The Represented Plaintiffs make a general objection to
Judge Orenstein’s determination that plaintiffs cannot establish
that they suffered any cognizable injury as the result of the
alleged violations.

(See generally Represented Pls. Obj.)

The

Represented Plaintiffs argue that a reasonable jury could find
that plaintiffs were injured by paying rent to various people,
and that they made those rent payments out of fear caused by
defendants and/or as a direct result of fraudulent
representations made by defendants regarding the ownership of
287 Franklin Avenue and its legality as a rental property.
id. at 4-7.)

(See

The Represented Plaintiffs further argue that they

were injured by certain defendants’ representations that they
would be responsible for the costs of utilities and repairs, and
that, even absent the economic damages of paying rent and
utilities, plaintiffs suffered injury to their “leasehold
property interests.”

(See id. at 5-8.)

Finally, the Represented Plaintiffs appear to object
to Judge Orenstein’s finding that plaintiffs could not have
(internal citations and quotation marks omitted); see Amato v. Hartnett, 936
F. Supp. 2d 416, 432 n.6 (S.D.N.Y. 2013); Banco Cent. de Paraguay v. Paraguay
Humanitarian Found., Inc., No. 01 Civ. 9649, 2005 WL 53271, at *8 (S.D.N.Y.
Jan. 7, 2005) (“The Court’s role is not to wander aimlessly through the
record in search of evidence that substantiates the allegations in the Rule
56.1 statement.”).

4

sustained a cognizable injury by paying rent to individuals who
plaintiffs later learned were not legally-entitled to rent
payments, arguing that their payment of rent to one who was not
entitled to collect it constitutes injury to the payer-tenant.
(Id. at 10-11.)

The Represented Plaintiffs do not cite any

authority in support of their objections to the R&R, other than
citing generally to United States v. Weinberg, 852 F.2d 681 (2d
Cir. 1988) and Buyers and Renters United to Save Harlem v.
Pinnacle Group N.Y. LLC, 575 F. Supp. 2d 499 (S.D.N.Y. 2008), as
well as New York housing statutes and state court cases
interpreting those statutes.
Mr. Sasmor submits three specific objections to the
R&R. 6

First, Mr. Sasmor contends that the R&R failed to apply

properly the “direct relationship” test for proximate causation
set forth in Holmes v. Securities Investor Protection Corp., 503
U.S. 258, 268-70 (1992), which, Mr. Sasmor asserts, would
establish that defendants’ purported racketeering activity
proximately caused plaintiffs to be injured by making rent and
other payments related to their tenancies at 287 Franklin
Avenue.

(See Sasmor Obj. Exs. 1, 2.)

Specifically, Mr. Sasmor

argues that plaintiffs made rent payments as a proximate result
of (1) extortion (in the form of Mr. Goldberger’s “forceful

6

Mr. Sasmor also submits numerous objections to Judge Orenstein’s summary of
the facts and procedural history of this case, as well as the
characterization of certain facts as “disputed.” (See Sasmor Obj. Ex. 4.)

5

nighttime knocking” to collect rent and defendants’ exploitation
of plaintiffs’ fear of being able to find other affordable
housing); (2) wire fraud (in the form of at least some
defendants advertising on the internet site, Craigslist,
premises that could not be occupied legally); and (3) mail and
wire fraud (in the form of misrepresentations that the alleged
enterprise made to plaintiffs regarding the ownership of 287
Franklin Avenue).

(See id.)

Second, Mr. Sasmor argues that application of the
Holmes test also establishes that defendants’ eviction
proceedings against plaintiffs, which Mr. Sasmor characterizes
as both mail/wire fraud and extortion, directly and proximately
caused plaintiffs’ litigation expenses.

(See id. Ex. 3.)

Specifically, he states that the eviction proceedings against
plaintiffs misrepresented (1) the Ronald Henry Land Trust’s
capacity to sue by initiating eviction proceedings in the
Trust’s name, (2) the Trust’s capacity to own property, and (3)
that rent for 287 Franklin Avenue could be collected legally,
and that the tenants collectively agreed to pay rent for the
entire building.

(See id.)

Mr. Sasmor contends that plaintiffs

spent time and money opposing the eviction proceedings because
they “relied on the misrepresentations that valid, proper
eviction proceedings had been brought.”

6

(Id.)

Third, Mr. Sasmor argues that the court should
consider plaintiffs’ state law claims even if their federal RICO
claims are dismissed upon consideration of the factors outlined
in Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350 n.7
(1988).

(See id. Ex. 6.)

Mr. Sasmor contends that the state

law claims in this case are simple, well-developed, and ripe for
adjudication before this court, which Mr. Sasmor argues has
considered most of the facts relevant to the state law claims.
(See id.)
The court has considered the foregoing objections and
undertaken a de novo review of the R&R and the underlying
pleadings and factual record upon which it is based.

Having

conducted such review, and upon careful consideration of the
parties’ objections, the objections are overruled.

This court,

concurring with Judge Orenstein in all material respects, hereby
adopts in its entirety the rationale articulated in the wellreasoned R&R, which embodies a correctly-grounded analysis of
the factual record and legal authorities.
Specifically, with regard to the Represented
Plaintiffs’ objections, the court agrees with and adopts Judge
Orenstein’s determination that plaintiffs did not suffer any
injury that was proximately caused by the alleged extortionate
acts of defendants or any alleged misrepresentations of the
ownership of 287 Franklin Avenue.

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To the extent the Represented

Plaintiffs argue that defendants’ alleged misrepresentations
regarding the legality of occupying the subject premises caused
plaintiffs’ injury in the form of rent paid, which would have
been otherwise withheld pursuant to Multiple Dwelling Law §§
301(1) and 302(1)(b), the court finds that all of plaintiffs’
federal claims must be dismissed because plaintiffs cannot
demonstrate the existence of a racketeering enterprise, as
discussed further below.
With regard to Mr. Sasmor’s objections, the court
agrees with Judge Orenstein’s findings that (1) plaintiffs
cannot show that they suffered any cognizable injury as a direct
result of defendants’ purported extortion 7 or misrepresentations
regarding the ownership of 287 Franklin Avenue; (2) plaintiffs
cannot show that their litigation expenses were proximately
caused by defendants’ purported misrepresentations in the
eviction proceedings against plaintiffs; and (3) the court
should decline to exercise jurisdiction over plaintiffs’ state
law claims after dismissal of the federal claims. 8

As discussed

7

The court notes that any fear plaintiffs felt that they would be unable to
find other affordable housing cannot form the basis of a RICO claim sounding
in extortion, because the evidence proffered by plaintiffs (see Sasmor Obj.
Ex. 2) indicates that such fear flowed from the state of the housing market
and not any action or threat by defendants to harm plaintiffs’ ability to
obtain other housing.
8
“In deciding whether to exercise jurisdiction over supplemental state-law
claims, district courts should balance the values of judicial economy,
convenience, fairness, and comity—the ‘Cohill factors.’” Klein & Co.
Futures, Inc. v. Bd. of Trade of City of New York, 464 F.3d 255, 262 (2d Cir.
2006) (citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988)).
Where, as here, “all federal-law claims are eliminated before trial, the

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in the R&R, with all inferences drawn in plaintiffs’ favor, and
as a matter of law, plaintiffs cannot demonstrate that their
rent, utility, and credit check payments were caused by either
Mr. Goldberger’s forceful knocking or any defendant’s
representation that various individuals were entitled to collect
rent; rather, any rent was paid in exchange for the occupancy of
the premises, regardless of whether defendants or Mr. Henry were
in fact legally entitled to such payments.
Mr. Sasmor has also argued that defendants committed
wire fraud by advertising for rent premises that could not be
legally occupied, N.Y. Mult. Dwell Law § 301(1), which resulted
in plaintiffs paying rent that they would have been entitled to
withhold, N.Y. Mult. Dwell Law § 302(1)(b), see also Sasmor 56.1
Stmt. ¶ 50.

Nevertheless, the court finds that defendants are

entitled to summary judgment with regard to this alleged
predicate act because , as a matter of law, plaintiffs cannot
establish the existence of a racketeering enterprise.
A RICO enterprise is “a group of persons associated
together for a common purpose of engaging in a course of
conduct,” the existence of which “is proved by evidence of an
ongoing organization, formal or informal, and by evidence that
balance of factors to be considered under the pendent jurisdiction
doctrine . . . will point toward declining to exercise jurisdiction over the
remaining state-law claims.” Cohill, 484 U.S. at 350 n. 7. Because the
court has dismissed all claims over which it has original jurisdiction, 28
U.S.C. § 1367(c)(3), the court declines to exercise supplemental jurisdiction
over plaintiffs’ state law claims.

9

that the various associates function as a continuing unit.”
United States v. Applins, 637 F.3d 59, 73 (2d Cir. 2011)
(quoting United States v. Turkette, 452 U.S. 576, 583 (1981)).
Although a RICO plaintiff need not establish that the enterprise
has a hierarchy, he or she must demonstrate that the purported
enterprise has “a purpose, relationships among those associated
with the enterprise, and longevity sufficient to permit these
associates to pursue the enterprise’s purpose.”
States, 556 U.S. 938 (2009).

Boyle v. United

The alleged enterprise must exist

“separate and apart from the pattern of activity in which it
engages.”

D. Penguin Bros. v. City Nat. Bank, 587 F. App’x 663,

667 (2d Cir. 2014) (citing Turkette, 452 U.S. at 583).
Nonetheless, “the evidence used to prove the pattern of
racketeering activity and the evidence establishing an
enterprise ‘may in particular cases coalesce.’”

Id.

As Mr. Sasmor states, the alleged purpose of the
enterprise is “to claim ownership of, manage, and operate
residential real estate at 287 Franklin, advertise and rent
illegal rooming units, obtain cooperation from tenants by
extortion, and conceal the proceeds to evade taxes.”
Mem. at 18-19.)

(Sasmor

Other than plaintiffs’ allegation that

defendants and other third parties are involved in an
enterprise, the alleged purpose of which is a laundry list of
the alleged predicate acts, plaintiffs have proffered

10

insufficient admissible evidence establishing the existence of
or defendants’ participation in the affairs of such an
enterprise.

Drawing all factual inferences in favor of

plaintiffs (see ECF No. 277, Plaintiff Sasmor’s Local Civil Rule
56.1 Statement (“Sasmor 56.1 Stmt.”) ¶¶ 155-163), the proffered
evidence--discovery responses indicating the existence of
meetings between certain defendants, testimony that certain
defendants had isolated interactions with other defendants, call
logs indicating telephone calls between certain defendants
without any evidence of the subject of those telephone calls,
and the fact that rent proceeds from the subject property were
deposited in a bank account belonging to one defendant, Henry
Management LLC--cannot prove the existence of an enterprise with
a common purpose involving any subset of defendants.

Because no

reasonable jury would find plaintiffs’ evidence sufficient to
establish the existence of an enterprise, a grant of summary
judgment in favor of defendants is appropriate.

See Smallwood

v. Lupoli, No. 07-4445-CV, 2009 WL 579419, at *1-2 (2d Cir. Mar.
4, 2009) (affirming district court’s grant of summary judgment
to defendants where plaintiffs failed to adduce sufficient
evidence supporting “a reasonable finding of a unifying
objective or an association-in-fact to coalesce around it”).
Finally, the court acknowledges Mr. Sasmor’s
objections to the facts cited in the R&R.

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(See Sasmor Obj. Ex.

IV).

Although the court notes that counsel for the Goldberger

Defendants’ affirmation in support of the Goldberger Defendants’
motion for summary judgment is not based on counsel’s personal
knowledge, the court has considered on the merits the substance
of the arguments asserted by all parties and the admissible
evidence submitted in the instant motions.

The court agrees

with Judge Orenstein’s determination that Mr. Sasmor’s Rule 56.1
Statement should not be deemed admitted in its entirety, insofar
as it contains legal conclusions and characterizations.
Furthermore, the court finds futile Mr. Sasmor’s objections
regarding Judge Orenstein’s characterization of certain facts in
Mr. Sasmor’s 56.1 Statement as disputed; even if the facts in
Mr. Sasmor’s 56.1 Statement are deemed undisputed, they do not
change the court’s determinations herein.

Similarly, the court

finds that the factual “errors” identified by Mr. Sasmor do not
affect the court’s analysis or outcome and were not relied upon
by Judge Orenstein in his recommendations.

Finally, because the

security watch organized by Mr. Sasmor cannot constitute a RICO
injury, and according to Mr. Sasmor, is not a basis for which he
seeks RICO compensation, the court denies any objection to Judge
Orenstein’s characterization of the plaintiffs’ motivations for
starting a security watch.

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CONCLUSION
For the reasons set forth above, Judge Orenstein’s
Report and Recommendation is incorporated by reference and
adopted in its entirety and the objections of the Represented
Plaintiffs and Mr. Sasmor are respectfully denied.

Accordingly,

Mr. Sasmor’s motion for summary judgment is denied in its
entirety, and the Goldberger, Land Trust, and Garcia Defendants’
motions for summary judgment are granted.

Having dismissed

plaintiffs’ federal law claims, the court declines to exercise
jurisdiction over plaintiffs’ state law claims.

The Clerk of

Court is respectfully requested to dismiss defendants Louis
Garcia, Chaim Goldberger, Joel Kaufman, Abraham Schneebalg,
Isaac Teitelbaum, Henry Management LLC, Kings County Realty
Corp, and Ronald Henry Land Trust from this action.

Plaintiffs

shall advise the court no later than September 30, 2015 as to
how they plan to proceed with this action.
SO ORDERED.
Dated:

September 17, 2015
Brooklyn, New York
_________/s/________________
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York

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