Ruotolo v. Fannie Mae et al
OPINION AND ORDER: Defendants' Motions to Dismiss are granted in large part. This terminates all of Plaintiff's federal claims. The remaining state-law claims are dismissed without prejudice because the Court declines to exercise supplement al jurisdiction over them. The Clerk of Court is respectfully requested to terminate the pending motions, (Dkt.Nos. 34 , 36 ), and close the case. SO ORDERED. (Signed by Judge Kenneth M. Karas on 3/13/2013) The Clerks Office Has Mailed Copies. (lnl)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Case No. 09-CV-7851 (KMK)
-vFANNIE MAE, PATTY CONTI, PATTY CONTI
REALTY, MARGARET STEWART, MARYLIN
OPINION AND ORDER
96 Pelham Drive
Cornwall, NY 12518
Pro se Plaintiff
Michael John Walsh
O’Melveny & Myers LLP
1625 Eye Street, NW
Washington, DC 20006
Counsel for Defendant Fannie Mae
Joseph A Catania , Jr.
Rebecca Grace Baldwin Manetllo
Tarshis, Catania, Liberth, Mahon & Milligram
One Corwin Court
P.O. Box 1479
Newburgh, NY 12550
Counsel for Defendants Patty Conti, Margaret Stewart,
Marylin VanAken, and Patty Conti Realty
KENNETH M. KARAS, District Judge:
According to the allegations in his Second Amended Complaint (the “SAC”), pro se
Plaintiff Angelo Ruotolo hoped to purchase a home in foreclosure from Defendant Fannie Mae,
the owner of the property. Plaintiff claims that he attempted to submit an all-cash offer of
$131,000 for the property, but Fannie Mae ultimately sold the property to someone else for
$130,000. (SAC ¶¶ 15, 15(a).)
Plaintiff attempts to make a federal case out of the failed real estate transaction.
Plaintiff’s SAC includes a series of wide-ranging allegations against Fannie Mae and various
real estate professionals also involved in the property’s sale, who are also named as defendants.
These include allegations that all Defendants engaged in an unlawful antitrust conspiracy and
that Fannie Mae violated various federal statutes, including the Sarbanes-Oxley Act of 2002 and
the legislation that created the Troubled Asset Relief Program, when Fannie Mae “shortchanged
the U.S. Treasury by delivering less than what the plaintiff offered.” (SAC ¶¶ 20, 21, 21(a).)
Fannie Mae and the realtor defendants now separately move to dismiss nearly all of the claims.
For the reasons below, the motions are granted, and the federal claims are dismissed. Further,
the Court declines to exercise jurisdiction over the few remaining state law claims. Accordingly,
the state law claims are also dismissed.
The following facts, alleged in the Second Amended Complaint, are taken as true for
purposes of deciding the instant motions. See Ruotolo v. City of New York, 514 F.3d 184, 188
(2d Cir. 2008).1
In Plaintiff’s opposition papers, he appears to have added several new facts to those
alleged in the SAC, or at least he has added additional details to certain allegations. (Pl. Mem. in
Opp. to Fannie Mae Mot. to Dismiss 2 (making certain additional allegations regarding the
primary real estate transaction at issue).) When determining a motion to dismiss for failure to
state a claim, a court is confined to the facts as pleaded in the complaint and any permissible
attachments, and a court should not consider new facts alleged in moving papers. See CFAA
Civic Ctr. Motors, Ltd. v. Mason St. Imp. Cars, Ltd., 387 F. Supp. 2d 378, 382 (S.D.N.Y. 2005)
(refusing to consider new damages allegations alleged in moving papers and not in the plaintiff’s
complaint). Nonetheless, the outcome here would not change were the Court to consider the
additional facts in pro se Plaintiff’s opposition papers.
According to the SAC, Plaintiff sought to purchase a single-family residential property at
14 Shivertown Road in New Paltz, New York (“Shivertown Road Property”). (SAC ¶ 3 & Ex.
D.) The Shivertown Road Property was offered for sale by Defendant Fannie Mae and brokered
by Defendants Patty Conti, Margaret Stewart, and Marilyn VanAken, all of the firm Defendant
Patti Conty Realty (the “Realtor Defendants”). (Id.)
On May 26, 2009, Plaintiff submitted an offer for $130,000, with 20 percent down and
80 percent to be financed by a mortgage, but this offer was not accepted. (SAC ¶ 23 n.*.) Later,
on an unspecified date, Plaintiff allegedly submitted an all-cash offer of $131,000 for the
Shivertown Road Property, and this offer “was either not communicated by real estate brokers to
Fannie Mae, or intentionally communicated late” to Fannie Mae. (SAC ¶ 7.) Instead, on June
20, 2009, Fannie Mae accepted another buyer’s bid of $130,000, and the Shivertown Road
Property closed on July 9, 2009. (SAC ¶ 18(a).) As a result of his unsuccessful efforts to
purchase the Shivertown Road Property, Plaintiff alleges that he suffered losses from foregone
rental income in an amount exceeding $500,000. (SAC ¶ 19.)
Plaintiff also alleges that he unsuccessfully attempted to purchase two additional
properties owned by Fannie Mae: one at 314 Hudson Street, Cornwall, New York, (SAC
¶ 18(c)), and another at 377 Grove Street, Brooklyn, New York, (SAC ¶ 18(d)). Each of these
properties was allegedly sold for an amount less than the all-cash offer made by Plaintiff. (SAC
¶¶ 18(c), 18(d).) Plaintiff alleges that both of these properties were offered for sale by Fannie
Mae, but he does not specify whether the named Realtor Defendants were also involved in these
transactions. (Id.) Plaintiff also does not specify whether he incurred any monetary damages as
a result of his failure to purchase these properties.
On September 11, 2009, Plaintiff filed a complaint in this Court. (Dkt. No. 1.) After
twice amending the Complaint with leave of the Court, Plaintiff now states six causes of action.
(SAC ¶¶ 22–27.) First, Plaintiff alleges that Defendants entered into an unlawful conspiracy to
restrain trade, in violation of federal and state antitrust laws. (SAC ¶ 22.) Second, Plaintiff
alleges that Defendants defrauded the U.S. Government, and he brings a claim pursuant to the
Fraud Enforcement and Recovery Act, Pub. L. 111-21, 123 Stat. 1617 (2009), a statute that
amended, among other laws, the False Claims Act. (SAC ¶ 23.) Third, Plaintiff alleges that
Defendant Fannie Mae received funds under the Troubled Asset Relief Program (TARP), a
government program created in 2008, Pub. L. 110-343, 122 Stat. 3765 (2008), and that Fannie
Mae’s actions violated various provisions of that Act. (SAC ¶ 24.) Fourth, Plaintiff contends
that the Realtor Defendants breached a state law fiduciary duty they owed to him. (SAC ¶ 25.)
Fifth, Plaintiff contends that Defendants engaged in unfair and deceptive business practices, in
violation of New York General Business Laws §§ 349 and 350. (SAC ¶¶ 26(a), 27(a).) Finally,
though not explicitly listed as a cause of action, Plaintiff’s SAC can be construed as attempting
to state a claim that Fannie Mae violated various provisions of the Sarbanes-Oxley Act of 2002,
Pub. L. 107-204, 116 Stat. 745 (2002).2 (SAC ¶¶ 18, 18(e), 18(f).)
Defendant Fannie Mae has moved under Federal Rule of Civil Procedure 12(b)(6) to
dismiss all claims against it for failure to state a claim. (Dkt. No. 36.) Separately, the Realtor
Defendants have moved under the same federal rule to dismiss nearly all claims against them for
Plaintiff’s SAC also appears at first glance to state a claim for violations of the Federal
Trade Commission Act and 18 U.S.C. § 1346, the federal honest services mail fraud statute,
(SAC ¶¶ 26–27), but he concedes there is no private right of action under either of those
provisions and has converted them to claims under New York General Business Law §§ 349 and
350, (SAC ¶¶ 26(a), 27(a)); accord Washington v. U.S. Tennis Ass’n, 290 F. Supp. 2d 323, 329
(E.D.N.Y. 2003) (“[T]he Federal Trade Commission Act . . . does not create a private right of
action for damages.”).
failure to state a claim. (Dkt. No. 34.) The Court considers both of these motions in this
A. Standard of Review
“On a Rule 12(b)(6) motion to dismiss a complaint, the court must accept a plaintiff’s
factual allegations as true and draw all reasonable inferences in [the plaintiff’s] favor.” Gonzalez
v. Caballero, 572 F. Supp. 2d 463, 466 (S.D.N.Y. 2008); see also Ruotolo, 514 F.3d at 188 (“We
review de novo a district court’s dismissal of a complaint pursuant to Rule 12(b)(6), accepting all
factual allegations in the complaint and drawing all reasonable inferences in the plaintiff’s
favor.” (internal quotation marks omitted)). In adjudicating a Rule 12(b)(6) motion, a district
court “‘confines its consideration to facts stated on the face of the complaint, in documents
appended to the complaint or incorporated in the complaint by reference, and to matters of which
judicial notice may be taken.’” Meisel v. Grunberg, 651 F. Supp. 2d 98, 107 (S.D.N.Y. 2009)
(alteration omitted) (quoting Leonard F. v. Isr. Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir.
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief
requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration,
citations, and internal quotation marks omitted). Instead, the Supreme Court has emphasized
that “[f]actual allegations must be enough to raise a right to relief above the speculative level,”
id., and that “once a claim has been stated adequately, it may be supported by showing any set of
facts consistent with the allegations in the complaint,” id. at 563. A plaintiff must allege
“enough facts to state a claim to relief that is plausible on its face.” Id. at 570. If a plaintiff
“ha[s] not nudged [his] claims across the line from conceivable to plausible, [his] complaint
must be dismissed.” Id.; see also Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (“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[n]’ — ‘that the pleader is entitled
to relief.’” (quoting Fed. R. Civ. P. 8(a)(2)) (alteration in original) (citation omitted)).
Finally, “[i]t is well-established that the submissions of a pro se litigant must be
construed liberally and interpreted to raise the strongest arguments that they suggest.” Triestman
v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (per curiam) (emphasis omitted)
(internal quotation marks omitted). However, even a pro se party is not exempt from
“compliance with relevant rules of procedural and substantive law.” Id. at 477 (internal
quotation marks omitted).
1. Overall Considerations
At the outset, it is useful to step back from the details of each claim and notice that
Plaintiff’s theory of the case as a whole is contradictory. This does not mean that the case is an
automatic non-starter — plaintiffs are entitled to plead multiple theories in the alternative — but
the contradictory nature of the very heart of the case does make the entire case somewhat
implausible from the beginning. This is important because making a threshold showing of
plausibility is the oft-repeated requirement of surviving a motion to dismiss. See Twombly, 550
U.S. at 554–63; see also Mary Jo C. v. N.Y. State & Local Ret. Sys., --- F.3d ----, No. 11-2215,
2013 WL 322879, at *3 (2d Cir. Jan. 29, 2013) (“The complaint must state a claim that is
plausible on its face.”). The tension arises because the necessary result of violations of the
different provisions invoked by Plaintiff is that Fannie Mae was simultaneously making
exorbitant profits but also shortchanging the U.S. Treasury of funds it could have recovered but
for various legal violations. It seems implausible that Fannie Mae was making and losing money
on the same transactions.
On the one hand, Plaintiff alleges that Defendants engaged in an unlawful antitrust
conspiracy, including by fixing prices and rigging bids. (SAC ¶¶ 22, 22(a) n.**.) It follows
necessarily from this theory that the ultimate evil of which Plaintiff complains is the elimination
of competition and resultant higher prices for consumers and monopoly profits for sellers: these
are the paradigmatic harms that the antitrust laws have long sought to prevent. See United States
v. Socony-Vacuum Oil Co., 310 U.S. 150, 223 (1940); see also Antitrust Div., U.S. Dep’t of
Justice, Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to
Look For, at 1, http://www.justice.gov/atr/public/guidelines/211578.pdf (“When competitors
collude, prices are inflated and the customer is cheated.”). Thus, if Plaintiff is correct on his
antitrust claims, then there must be harm to competition; consumers would have paid more than
they would have in a competitive market; and the Realtor Defendants and Fannie Mae would
have profited more than they would have in a market with free and fair competition. See Atl.
Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 338 (1990) (“The antitrust laws were enacted
for ‘the protection of competition . . . .’”) (quoting Brown Shoe Co. v. United States, 370 U.S.
294, 320 (1962)) (emphasis in original)); see generally Ernest Gellhorn & William Kovacic,
Antitrust Law and Economics in a Nutshell 42–71 (4th ed. 1994) (explaining profit-maximizing
behavior in competitive and non-competitive environments).
On the other hand, Plaintiff alleges statutory violations stemming from Fannie Mae’s
alleged acceptance of a lower bid on the property at issue, and this acceptance purportedly
“cheated” the U.S. Treasury out of a better return on its alleged investment in Fannie Mae.
(SAC ¶ 23(a).) Indeed, given the number of homes Fannie Mae sells in foreclosure, Plaintiff
contends, albeit without any factual support, that “the amount of money that Fannie Mae is
shortchanging the U.S. Treasury isn’t just one or a few thousand dollars . . . [but the amount]
could total in the hundreds of millions of dollars.” (Id.) Hence the tension on the face of the
Thus, when the SAC here is read “‘objectively and as a whole,’” Ruotolo, 514 F.3d at
190 (quoting Ezekwo v. N.Y.C. Health & Hosp. Corp., 940 F.2d 775, 781 (2d Cir. 1991)), the
factual allegations do not fit together in a way that would help Plaintiff make the threshold
showing of plausibility required to survive a motion to dismiss. Still, the Court addresses each
claim on its own merits.
2. First Cause of Action: Antitrust Violations
Turning to the specific causes of action, Plaintiff first contends that Defendants violated
the “Federal Antitrust provisions including but not limited to the Sherman Act which specifically
prohibits agreements between competitors to engage in price fixing, rig bidding [sic], or
allocation of customers.” (SAC ¶ 22.) Even taking all of the allegations in the SAC as true,
Plaintiff has failed to state an antitrust claim.
At the threshold, Plaintiff cannot actually sue directly under the Sherman Act, 15 U.S.C.
§ 1, because “Section 1 of the Sherman Act does not itself provide a private right of action.” In
re Publ’n Paper Antitrust Litig., 690 F.3d 51, 62 (2d Cir. 2012). Instead, the right to sue “is
established by section 4 of the Clayton Act, which authorizes private suits by ‘any person who
shall be injured in his business or property by reason of anything forbidden in the antitrust
laws.’” Id. (quoting 15 U.S.C. § 15). Because Plaintiff is proceeding pro se, the Court will
construe the SAC to invoke the private-right-of-action provisions of the Clayton Act. See
Greene v. Conn. Bd. of Accountancy, No. 00-CV-599, 2001 WL 286855, at *2 (D. Conn. Mar.
20, 2001) (construing a pro se plaintiff’s antitrust claims to have been brought pursuant to the
To prevail on a claim stating a Sherman Act violation, a private plaintiff “must allege ‘a
combination or some form of concerted action between at least two legally distinct economic
entities’ that ‘constituted an unreasonable restraint of trade either per se or under the rule of
reason.’” Primetime 24 Joint Venture v. NBC, 219 F.3d 92, 103 (2d Cir. 2000) (quoting Capital
Imaging Assocs. v. Mohawk Valley Med. Assocs., 996 F.2d 537, 542 (2d Cir. 1993)).
Additionally, “a plaintiff must independently show ‘antitrust injury’” — also called “antitrust
standing” — because “‘a plaintiff can recover only if the loss stems from a competition-reducing
aspect or effect of the defendant’s behavior.” Id. (quoting Atl. Richfield Co., 495 U.S. at 344);
see also Stolow v. Greg Manning Auctions Inc., 258 F. Supp. 2d 236, 243 (S.D.N.Y. 2003)
(same). Here, Plaintiff’s SAC alleges neither a plausible antitrust violation nor a requisite
a. Substantive Violations
In attempting to make out his antitrust claim, Plaintiff alleges there was some sort of
“conspiracy between Fannie Mae personnel and Fanne Mae brokers.” (SAC ¶ 18(a).) The goals
and scope of the conspiracy are not stated with any precision, but Plaintiff asks the Court to infer
some manner of conspiracy on the basis of the “extraordinary speed with which the subject
property closed”; the “repeated indifference and disregard of Plaintiff’s multiple notices to
Fannie Mae before closing, that the realtors had not submitted to Fannie Mae one or more of the
Plaintiff’s offers”; the “fact that Fannie Mae has continued to carry out business with Conti
realty, even though Conti was allegedly reprimanded for failing to submit [P]laintiff’s offer”;
and allegations pertaining to two other instances where Plaintiff allegedly submitted higher bids
than Fannie Mae accepted. (SAC ¶¶ 18(a)–(g).) Plaintiff contends that these facts show that the
Defendants combined “to engage in bid rigging, bid suppression and price fixing in order to
achieve a predetermined outcome as to the successful bidder, and thereby limit or eliminate
competing bids.” (SAC ¶ 14.) These factual allegations are insufficient to state a plausible
antitrust conspiracy between Fannie Mae and the Realtor Defendants.
“In order to establish a conspiracy in violation of § 1 [of the Sherman Act], whether
horizontal, vertical, or both, proof of joint or concerted action is required.” Anderson News,
L.L.C. v. Am. Media, Inc., 680 F.3d 162, 183 (2d Cir. 2012). To prove the existence of this
unlawful conspiracy, “‘the antitrust plaintiff should present direct or circumstantial evidence that
reasonably tends to prove that the [defendant] and others had a conscious commitment to a
common scheme designed to achieve an unlawful objective.’” Id. at 184 (quoting Monsanto Co.
v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984)) (emphasis omitted). Accordingly, “[a]t the
pleading stage, a complaint claiming conspiracy, to be plausible, must plead ‘enough factual
matter (taken as true) to suggest that an agreement was made,’ i.e., it must provide ‘some factual
context suggesting [that the parties reached an] agreement,’ not facts that would be ‘merely
consistent’ with an agreement.” Id. (quoting Twombly, 550 U.S. at 556, 549, 557).
Here, Plaintiff has not pleaded facts that plausibly show that Defendants had a conscious
commitment to a common scheme designed to achieve an unlawful objective. Indeed, it is
implausible to think that Fannie Mae would conspire with its own sales agents to keep sale
prices low on houses it owns and is selling in foreclosure, thereby reducing its own profits.
Indeed, it is not even clear to the Court what the alleged agreement is supposed to look like. Did
Defendants conspire just to refuse offers from Plaintiff alone? If so, that does not state an
antitrust claim, because the “antitrust laws were enacted for ‘the protection of competition,’” not
the protection of a single market participant like Plaintiff. Atl. Richfield Co., 495 U.S. at 338
(quoting Brown Shoe, 370 U.S. at 320) (emphasis in original). Or is the conspiracy broader, as
Plaintiff occasionally implies with such unsupported assertions that the amount Fannie Mae “is
shortchanging” the Treasury “could total in the hundreds of millions of dollars,” (SAC ¶ 23(a))?
If so, then the SAC also fails to state claim, as it contains no specific allegations regarding
property sales not involving Plaintiff. To survive a motion to dismiss, “[f]actual allegations
must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.
The Court recognizes that the allegation that Fannie Mae is not maximizing profits is not
absolutely fatal to an antitrust claim. There are several accepted antitrust theories, such as
predatory pricing, that do involve sellers incurring short-term losses — but these strategies are
employed with the ultimate goal of eliminating competitors and then raising prices in the longrun. See Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227, 231 (1st Cir. 1983) (Breyer,
J.) (“[T]here is general agreement that a profit-maximizing firm might sometimes find it rational
to engage in predatory pricing; it might do so if it knows (1) that it can cut prices deeply enough
to outlast and to drive away all competitors, and (2) that it can then raise prices high enough to
recoup lost profits (and then some) before new competitors again enter the market.”). The
reason these doctrines are not implicated here is that Plaintiff has not even attempted to state a
claim for this sort of antitrust violation, because there is no articulation of how Fannie Mae
stands eventually to recoup any profits it loses by allegedly conspiring to accept bids lower than
the maximum it has available.
Plaintiff uses terms like “bid rigging” and “bid suppression” to describe the alleged
conspiracy, but these terms of art do not apply to the factual allegations described. Bid rigging is
“[a]ny agreement between competitors pursuant to which contract offers are to be submitted to
or withheld from a third party.” United States v. Portsmouth Paving Corp., 694 F.2d 312, 325
(4th Cir. 1982) (emphasis added). Bid rigging is thus merely a species of horizontal price fixing
among competitors. See Philip Morris Inc. v. Heinrich, No. 95-CV-328, 1996 WL 363156, at *9
(S.D.N.Y. June 28, 1996) (“Courts have specifically classified bid-rigging as a form of price
fixing that constitutes a per se violation.”). These doctrines cannot apply to this case, because
Plaintiff has alleged that Fannie Mae is part of the conspiracy, even though it has a buyer-seller,
vertical relationship with the Realtor Defendants. Fannie Mae’s alleged inclusion of the Realtor
Defendants in the scheme entirely defeats the point of fixing prices or rigging bids, making the
entire scheme implausible.
But even assuming that Plaintiff has stated enough facts for the Court to infer an
antecedent agreement between all Defendants to take some concerted action with respect to
Plaintiff’s bids on the property at issue, Plaintiff’s claim still fails to meet other substantive legal
requirements. For instance, because the antitrust laws are focused on preserving robust
competition, “an antitrust complaint must adequately . . . define the relevant product market.”
World Wrestling Entm’t, Inc. v. Jakks Pac., Inc., 425 F. Supp. 2d 484, 517 (S.D.N.Y. 2006)
(alteration in original) (quoting Rock TV Entm’t, Inc. v. Time Warner, Inc., No. 97-CV-161, 1998
WL 37498, at *2 (S.D.N.Y. Jan. 30, 1998)). But this requirement is simply absent from the
SAC. And because the scope of the conspiracy is so ill-defined — as mentioned above, the
claim here is both at times quite individualized but also exceedingly far-ranging — it is
impossible for the Court to guess the relevant market. Therefore, Plaintiff has failed to state a
claim for a substantive violation of the antitrust laws.3
b. Antitrust Injury
Separately, an antitrust plaintiff must “allege standing to bring suit. A plaintiff only has
standing if he suffered an antitrust injury.” Stolow, 258 F. Supp. 2d at 243. An antitrust injury is
“injury of the type the antitrust laws were intended to prevent and that flows from that which
makes defendants’ acts unlawful.” Atl. Richfield, 495 U.S. at 334 (internal quotation marks
omitted). As relevant here, this means that “[a]n antitrust plaintiff must allege not only
cognizable harm to [him]self, but an adverse effect on competition market-wide.” Todd v. Exxon
Corp., 275 F.3d 191, 213 (2d Cir. 2001). Thus, a plaintiff “bears the initial burden of showing
that the challenged action has had an actual adverse effect on competition as a whole in the
relevant market; to prove it has been harmed as an individual competitor will not suffice.”
Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537, 543 (2d Cir.
1993). This burden applies no matter what type of violation is alleged, for “the mere presence of
a substantive Sherman Act section 1 violation . . . does not by itself bestow on any plaintiff a
private right of action for damages.” Ind. Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d
1409, 1419 (7th Cir. 1989).
Here, Plaintiff does not meet this requirement. Plaintiff’s alleged damages are related
solely to the potential rental income that he supposedly lost because he did not succeed in
Plaintiff also brings a state law antitrust claim under the Donnelly Act. (SAC ¶ 22(a).)
This claim must be dismissed for the same reasons as the federal claim. See X.L.O. Concrete
Corp. v. Rivergate Corp., 634 N.E.2d 158, 161 (N.Y. 1994) (Donnelly Act “should generally be
construed in light of Federal precedent” (internal quotation marks omitted)); see also Kramer v.
Pollock-Krasner Found., 890 F. Supp. 250, 254 (S.D.N.Y. 1995) (holding that because the New
York courts interpret New York antitrust laws essentially in parity with federal antitrust law, the
court “analyze[d] the Sherman and Donnelly Act claims together”).
purchasing the house he sought to buy. (SAC ¶ 19.) Plaintiff does not allege anywhere how the
alleged conspiracy harmed competition as a whole — nor does the Court see how Plaintiff could
so allege. Indeed, as mentioned in the previous subsection, it is not even clear what the relevant
market is, and therefore there are no allegations regarding what segment of competition could
possibly be harmed by the alleged agreement. Therefore, Plaintiff lacks standing to allege an
antitrust violation. See Greene, 2001 WL 286855, at *4 (Even assuming that “the defendants’
concerted actions may have prevented the plaintiff from participating in the audit bidding
process, [the alleged actions] did not result in injury to the market as a whole.”)
3. Second Cause of Action: FERA Violations
Plaintiff, in a cause of action that appears to apply against only Defendant Fannie Mae,
next contends that Fannie Mae is “shortchanging the U.S. Treasury” in violation of the Fraud
Enforcement and Recovery Act of 2009 (“FERA”). (SAC ¶ 23(a).) FERA contained
amendments to the False Claims Act, and the False Claims Act in turn permits civil actions by
private persons for violations of 31 U.S.C. § 3729. See 31 U.S.C. § 3730(b). By law, such
actions can be brought only “in the name of the Government,” id. § 3730(b)(1), and the initiation
of such a suit must begin with certain specific procedures: “A copy of the complaint and written
disclosure of substantially all material evidence and information the person possesses shall be
served on the Government pursuant to Rule 4[(i)] of the Federal Rules of Civil Procedure. The
complaint shall be filed in camera, shall remain under seal for at least 60 days, and shall not be
served on the defendant until the court so orders,” id. § 3730(b)(2). Under this statute, private
persons who attempt to initiate such a suit are not actually plaintiffs but rather are deemed
“relators,” and “[b]ecause relators lack a personal interest in False Claims Act qui tam actions,
[the Second Circuit has] conclude[d] that they are not entitled to proceed pro se.” United States
ex rel. Mergent Servs. v. Flaherty, 540 F.3d 89, 93 (2d Cir. 2008).
Plaintiff’s FERA claim must be dismissed because Plaintiff has not met these
requirements. Plaintiff is currently proceeding pro se, which the Second Circuit has expressly
prohibited. See id. This alone requires dismissal. Further, while Plaintiff contends that he “did
file the amended complaint under seal” and that he also “provided copies to the Special Inspector
for Troubled Asset Relief Program (SIGTARP) and the Department of Justice,” there is no
allegation that Plaintiff actually served the proper institutions of the Federal Government
according to Federal Rule of Civil Procedure 4(i), as required by statute. See 31 U.S.C.
§ 3730(b)(2). This, too, requires dismissal. See United States ex rel. Pilon v. Martin Marietta
Corp., 60 F.3d 995, 999 (2d Cir. 1995) (dismissal with prejudice appropriate in False Claims Act
action where the complaint was not filed under seal and the Government was not properly
served; “[t]hat the government and Defendants may have been aware of the substance of the
[purported relators’] allegations does not diminish the consequences of the [purported relators’]
failure to comply with the statutory requirements”).
4. Third Cause of Action: TARP Claims
Next, Plaintiff purports to sue Fannie Mae under the 2008 statute that created the
Troubled Asset Relief Program, or TARP, which is now codified at 12 U.S.C. § 5211 et seq.
Plaintiff contends that he should be able to sue Fannie Mae under this provision because the
statute “places an onus on Fannie Mae to act responsibly and prudently with Taxpayer funds.”
(Pl. Aff. in Opp. to Fannie Mae Mot. to Dismiss at 13.) Perhaps Plaintiff’s statement is true as a
purely legal or philosophical matter, but the presence of an alleged legal violation does not
necessarily mean that a private plaintiff may sue a TARP recipient under that statute and recover
damages. In fact, it is clear that a private plaintiff cannot do so.4
Section 5211(a)(1) states that the Treasury Secretary “is authorized to establish” the
TARP to “purchase, and to make and fund commitments to purchase, troubled assets from any
financial institution, on such terms and conditions as are determined by the Secretary, and in
accordance with this chapter and the policies and procedures developed and published by the
Secretary.” 12 U.S.C. § 5211(a)(1). The remainder of the statute spells out additional terms and
delegates authority to the Treasury Secretary to implement the legislation. Id. § 5211–41.
Crucially, the statute explicitly provides for judicial review of “[a]ctions by the Secretary
pursuant to the authority of this chapter,” but it does not specify that private plaintiffs may sue
for violations of the statute. See id. § 5229(a). There is therefore no argument that there is an
express right of action by private plaintiffs against financial institutions, and Plaintiff does not
attempt to press this argument. Rather, relying on several decades-old Supreme Court cases,
Plaintiff contends that TARP contains an implied private right of action. (Pl. Aff. in Opp. to
Fannie Mae Mot. to Dismiss at 13.)
Plaintiff’s argument fails. “‘[P]rivate rights of action to enforce federal law must be
created by Congress’ and the statute in question must evidence congressional intent to create a
private right of action.” Abrahams v. MTA Long Island Bus, 644 F.3d 110, 117 (2d Cir. 2011)
(quoting Alexander v. Sandoval, 532 U.S. 275, 286 (2001)). In the Second Circuit, “[t]o
discover whether Congress intended that the Act be enforceable by a private right of action,
[courts] look to the ‘text and structure’ of the statute.” Id. at 118 (quoting George v. N.Y.C.
Dep’t of City Planning, 436 F.3d 102, 103 (2d Cir. 2006)) (first alteration in original).
Further, it appears that Fannie Mae did not actually receive any TARP funds from the
Federal Government. (Fannie Mae Mem. at 11 n.7) (citing Fed’l Nat’l Mortgage Ass’n, Annual
Report (Form 10-K), at 34 (Feb. 29, 2012)). Even though the Court probably could judicially
notice this fact, it is irrelevant, because Plaintiff’s claim fails for other, independent reasons.
Here, nothing about the statute evinces congressional intent to create a private right of
action against TARP fund recipients. Indeed, as the Eleventh Circuit noted in an unpublished
decision, the fact that Congress affirmatively created a right of action against the Secretary
strongly implies that Congress did not wish to create a right of action against the recipients of
federal funds. See Thomas v. Pentagon Fed. Credit Union, 393 F. App’x 635, 638 (11th Cir.
2010). This is consistent with the Supreme Court’s statement in Sandoval that “[t]he express
provision of one method of enforcing a substantive rule suggests that Congress intended to
preclude others.” 532 U.S. at 290; see also Transamerica Mortgage Advisors, Inc. v. Lewis, 444
U.S. 11, 19–20 (1979) (“[It is an elemental canon of statutory construction that where a statute
expressly provides a particular remedy or remedies, a court must be chary of reading others into
it. . . . In view of the express provisions for enforcing [the statute at issue], it is highly
improbable that Congress absentmindedly forgot to mention an intended private action.”
(internal quotation marks omitted)).
Accordingly, the TARP claims against Fannie Mae are dismissed because the statute
contains no private right of action against TARP fund recipients. This is also the conclusion
reached by numerous other courts to have considered the issue. See, e.g., Thomas, 393 F. App’x
at 638; Citron v. Wachovia Mortg. Corp., No. 10-CV-1790, 2013 WL 523623, at *14, --- F.
Supp. 2d ---- (M.D. Fla. Feb. 12, 2013) (holding that there is no provision granting a plaintiff a
private right of action under TARP); Robinson v.Wells Fargo Bank, N.A., No. 09-CV-2066, 2010
WL 2534192, at *6-7 (D. Ariz. June 18, 2010) (same); Logan v. U.S. Bank Nat’l Ass’n, No. 09CV-8950, 2010 WL 1444878, at *9 (C.D. Cal. Apr. 12, 2010) (same); Bank v. Homes By
Williamscraft, Inc., No. 09-CV-91, 2009 WL 3753585, at *2 (N.D. Ga. Nov. 6, 2009) (same);
Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1185 (N.D. Cal. 2009) (same).
5. Unspecified Cause of Action: Violations of the Sarbanes-Oxley Act of 2002
At a few points in the SAC, Plaintiff mentions his belief that Fannie Mae has failed to
comply with the requirements of the Sarbanes-Oxley Act of 2002, or “SOX.” (SAC ¶¶ 18
(alleging that “Fannie Mae was required to conduct a thorough investigation before closing on
the subject property, pursuant to Sarbanes Oxley legislation”); 18(e) (alleging the “repeated
failure by Fannie Mae to comply with Sarbanes Oxley legislation which mandates that Fannie
Mae perform a fraud risk assessment and evaluate internal controls to prevent and detect fraud”);
18(f) (alleging the “repeated indifference and disregard by Fannie Mae to comply with Sarbanes
Oxley”).) However, the SAC contains no specific claim for relief based on a violation of any
provision of SOX. Nonetheless, to the extent the SAC can be construed to attempt to state a
claim for violation of any SOX provision, those claims are dismissed.
While the Court is mindful of the requirement that it broadly construe pro se pleadings,
“a pro se plaintiff must support his claims with ‘specific and detailed factual allegations, not
stated in wholly conclusory terms.’” Wightman-Cervantes v. ACLU, No. 06-CV-4708, 2007 WL
1805483, at *1 (S.D.N.Y. June 25, 2007) (quoting Friedl v. City of New York, 210 F.3d 79,
85–86 (2d Cir. 2000)). Even from pro se plaintiffs, “[b]ald assertions and conclusions of law are
not adequate to withstand a motion to dismiss.” Wilson v. Dalene, 699 F. Supp. 2d 534, 554
(E.D.N.Y. 2010) (internal quotation marks omitted).
Here, the SAC’s passing broadsides regarding Fannie Mae’s supposed violations of SOX
are the very definition of the kind of conclusory assertions that are insufficient to survive a
motion to dismiss, as there are no facts alleged whatsoever that have anything to do with the
purported violations of SOX. In any event, there are only two express private rights of action in
the legislation, and neither provision is related to the allegations contained in this case. See 15
U.S.C. § 7244(a)(2)(B) (private right of action to enforce prohibition on certain kinds of insider
trading); 18 U.S.C. § 1514A(b) (private right of action to enforce prohibition on terminating
whistleblowers); see also Robert F. Serio & Matthew S. Kahn, Private Rights of Action and the
Sarbanes-Oxley Act of 2002, 38 Sec. Reg. & L. Rep. 668–71 (2006) (discussing the limited
private rights of action in the Act); cf. Cohen v. Viray, 622 F.3d 188, 193 (2d Cir. 2010) (holding
that there is no implied private right of action under 15 U.S.C. § 7243, another provision of
SOX). Therefore, there is no private of action under SOX for Plaintiff to bring any claim under
Accordingly, to the extent the SAC attempts to state a claim under SOX, that claim is
6. Defendants’ Motions to Dismiss Were Timely
Finally, in his opposition, Plaintiff contends that Defendants’ Motions were untimely.
He gives two reasons, both of which are without merit.
First, in the Court’s Scheduling Order of April 3, 2012, Defendants were to file and serve
their Motions to Dismiss by no later than May 11, 2012. (Dkt. No. 32.) Plaintiff contends that
Defendants missed this deadline because he did not receive hard copies in the mail until three
days after May 11, 2012, though Plaintiff acknowledges that the Motions were postmarked on
time. (Pl. Mem. in Opp. to Realtor Def. Mot. to Dismiss 13.) Indeed, not only were both
Motions mailed on May 11, 2012, but they were also electronically filed by ECF on that date.
(Dkt. Nos. 34, 36.) This was in full compliance with the Court’s order, the Federal Rules of
Civil Procedure, and the Local Rules of this District. See Fed. R. Civ. P. 5 (describing filing and
service requirements); Local Civ. R. 5.2, 6.1 (same, under Local Rules).
Plaintiff’s citation of Baldwin County Welcome Center v. Brown, 466 U.S. 147 (1984),
for the proposition that the filings were nevertheless untimely is creative but inapt. In that case,
the Supreme Court, relying on what is now Federal Rule of Civil Procedure 6(d), recognized
that, when an official notice of a government action is mailed to an individual, the presumed date
of receipt is three days from the date of mailing. Id. at 148 & n.1. The relevant Rule states that
“[w]hen a party may or must act within a specified time after service and service is made [by
mail], 3 days are added after the period would otherwise expire.” Fed. R. Civ. P. 6(d). The
implication is that when the recipient of a piece of mail must act within a specified time of the
sender’s service, then the recipient is presumed to have received the sender’s notice three days
after the sender mails the notice. See Payan v. Aramark Mgmt. Servs. Ltd. P’ship, 495 F.3d
1119, 1122 (9th Cir. 2007) (relying on Baldwin and holding that, for purposes of a 90-day
window to initiate a federal lawsuit under Title VII, a notice of right to sue letter from the EEOC
is presumed to have been received three days after the EEOC’s mailing where date of actual
receipt is unknown). This legal rule has nothing to do with whether the sender’s notice itself
was timely filed when it is the sender’s deadline that is being calculated, so it does not apply
Second, Plaintiff contends the Motions to Dismiss were untimely because they were not
filed within 21 days of the service of the SAC, as specified by Federal Rule of Civil Procedure
12(a). This argument fails because the Court, by Order, explicitly extended the time for
Defendants to file their Motions, (Dkt. No. 32), and the Federal Rules allow for such extensions,
see Fed. R. Civ. P. 6(b).
Accordingly, the motions were timely, and they are properly considered by this Court.
C. Effect of Dismissing All Federal Claims
The remaining causes of action are brought exclusively brought under state law.
Namely, as a fourth cause of action, Plaintiff contends that the Realtor Defendants breached the
state law fiduciary duties they owed Plaintiff as his real estate agents. (SAC ¶ 25.) As a fifth
cause of action, Plaintiff claims that Defendants violated New York General Business Law
§ 349, which makes unlawful “[d]eceptive acts or practices in the conduct of any business, trade
or commerce or in the furnishing of any service” in New York state, as well as § 350, which
prohibits false advertising.5 See N.Y. Gen. Bus. Law §§ 349(a), 350. The Court declines to
exercise jurisdiction over these claims.6
When the federal claims are dismissed in a case initially presenting both federal and state
law claims, the Court has discretion either to exercise supplemental jurisdiction and adjudicate
the state law claims in federal court or to dismiss the case and allow the state law claims to be
litigated in state court. See 28 U.S.C. § 1367(c) (providing that a district court “may decline to
exercise supplemental jurisdiction” over a claim over which it would not normally have original
jurisdiction when “the district court has dismissed all claims over which it has original
Initially, Plaintiff’s fifth cause of action claimed Defendants violated the Federal Trade
Commission Act, 15 U.S.C. §§ 41–58, and his sixth cause of action claimed Defendants violated
the “Honest Services Doctrine as enacted by Congress in 1988,” which is codified at 18 U.S.C.
§ 1346. (SAC ¶¶ 26, 27.) However, Plaintiff has voluntarily withdrawn those claims after
conceding that neither statute contains a private right of action. (SAC ¶¶ 26(a), 27(a).)
The breach of fiduciary duty claims are against only the Realtor Defendants, New York
residents who are not diverse from Plaintiff, which means this Court has no diversity
jurisdiction. See 28 U.S.C. § 1332(a)(1) (granting federal courts diversity jurisdiction in cases
“between . . . citizens of different States” where the amount in controversy exceeds $75,000).
The Court also does not have diversity jurisdiction over the state-law deceptive practices claims
because, even though Fannie Mae appears to be implicated by this claim, so too are the Realtor
Defendants, and the Supreme Court has long “read the statutory formulation ‘between . . .
citizens of different States’ to require complete diversity between all plaintiffs and all
defendants.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (citation omitted). Thus, this
Court has no original jurisdiction to adjudicate either claim.
jurisdiction”). Courts look to several factors in exercising their discretion, and “‘in the usual
case in which all federal-law claims are eliminated before trial, the balance of factors to be
considered under the [supplemental] jurisdiction doctrine — judicial economy, convenience,
fairness, and comity — will point toward declining to exercise jurisdiction over the remaining
state-law claims.’” Valencia ex rel. Franco v. Lee, 316 F.3d 299, 305 (2d Cir. 2003) (quoting
Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988)).
There is nothing that separates this case from the usual case where courts typically
decline to exercise jurisdiction over state law claims when all federal claims are dismissed
before trial. See Dellutri v. Vill. of Elmsford, --- F. Supp. 2d ----, No. 10-CV-1212, 2012 WL
4473268, at *17 (S.D.N.Y. Sept. 28, 2012) (“As all of Plaintiff’s federal claims have been
dismissed, the Court declines to exercise supplemental jurisdiction over Plaintiff’s state law
claims.”); see also Middleton v. United States, No. 10-CV-6057, 2012 WL 394559, at *1
(E.D.N.Y. Feb. 7, 2012) (declining to exercise supplemental jurisdiction over state claims,
because no federal claims survived a motion to dismiss); Williams v. Berkshire Fin. Grp., Inc.,
491 F. Supp. 2d 320, 329 (E.D.N.Y. 2007) (same). Accordingly, the remaining state law claims
are dismissed without prejudice.7
The Court wishes to make Plaintiff aware that various statutes of limitations may
impose a time limit on his ability to refile the state law claims in New York state court, should
he wish to continue pursuing these claims. In the event that the statutes of limitations have run
on any of the claims, federal law provides that Plaintiff has at least 30 days to refile the claims in
state court. See 28 U.S.C. § 1367(d) (“The period of limitations for any claim asserted under
subsection (a) [of § 1367], and for any other claim in the same action that is voluntarily
dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be
tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law
provides for a longer tolling period.”). Some states extend that time period, and it appears that
New York has taken advantage of that and given plaintiffs six months from the time of dismissal
in federal court to refile in state court. See N.Y. C.P.L.R. § 205 (“If an action is timely
commenced and is terminated in any other manner than by a voluntary discontinuance, a failure
to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to
prosecute the action, or a final judgment upon the merits, the plaintiff, or, if the plaintiff dies,
For the foregoing reasons, Defendants' Motions to Dismiss are granted in large part.
This terminates all of Plaintiffs federal claims. 8 The remaining state-law claims are dismissed
without prejudice because the Court declines to exercise supplemental jurisdiction over them.
The Clerk of Court is respectfully requested to terminate the pending motions, (Dkt.
Nos. 34, 36), and close the case.
White Plains, New York
ETH M. KARAS
TED STATES DISTRICT JUDGE
and the cause of action survives, his or her executor or administrator, may commence a new
action upon the same transaction or occurrence or series of transactions or occurrences within six
months after the termination provided that the new action would have been timely commenced at
the time of commencement of the prior action and that service upon defendant is effected within
such six-month period."); see also Murray v. Visiting Nurse Servs. ofN. Y, 528 F. Supp. 2d 257,
281 (S.D.N.Y. 2007) (explaining the operation of28 U.S.C. § 1367(d) and N.Y. C.P.L.R. § 205).
The Court wishes to stress, however, that Plaintiff should not affirmatively rely on the Court's
brief survey of the law in this area, and Plaintiff must conduct his own inquiry to determine the
time in which he may refile his claims in state court.
Plaintiff has now submitted three complaints, and, as explained in this Opinion, "the
third is no closer to the first in stating a claim ... upon which relief could be granted." Williams,
491 F. Supp. 2d at 328. Indeed, the Court is quite familiar with Plaintiffs claims, because, in
addition to having read the various filings, the Court has conducted two pre-motion conferences
where Plaintiff was given the opportunity to elaborate on his factual claims and his legal
arguments. (See Unnumbered Dkt. Entries of January 25, 2012 and April 2, 2012.) Now, more
than three years have passed since Plaintiff filed his initial Complaint, and it is clear that "the
facts that plaintiff has pled are inconsistent with a [federal claim] .. ., so that the complaint's
deficiencies are not subject to cure." Williams, 491 F. Supp. 2d at 328. Accordingly, the Court
has discretion to dismiss the federal claims without giving Plaintiff yet another chance to amend.
See id.; see also Fulton v. Goard, 591 F.3d 37,45 (2d Cir. 2009) ("We are normally
accommodating to motions for leave to amend pro se complaints, but may deny them 'when
amendment would be futile."' (quoting Tacker v. Philip Morris Cos., 470 F.3d 481,491 (2d Cir.
2006) (internal citation omitted)).
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